Do I need to report HSA if only my employer made contributions to it?

  • employer contributions to HSA
  • I am retired and do not receive a W-2, however my former employer is funding a "spending account" for my healthcare premiums.  This account, if not used entirely, will roll over from year to year.  How is this treated?
  • Sounds like you are describing a Health Reimbursement Arrangement (HRA)
    You do not pay federal income taxes or employment taxes on amounts your employer contributes to the HRA.
    http://www.irs.gov/publications/p969/ar02.html#d0e3240
    A health reimbursement arrangement (HRA) must be funded solely by an employer. The contribution cannot be paid through a voluntary salary reduction agreement on the part of an employee. Employees are reimbursed tax free for qualified medical expenses up to a maximum dollar amount for a coverage period. An HRA may be offered with other health plans, including FSAs.

    Note. Unlike HSAs or Archer MSAs which must be reported on Form 1040 or Form 1040NR, there are no reporting requirements for HRAs on your income tax return.

    For information on the interaction between an HRA and an HSA, see Other employee health plans under Qualifying for an HSA, earlier.

    What are the benefits of an HRA?   You may enjoy several benefits from having an HRA.
    Contributions made by your employer can be excluded from your gross income.

    Reimbursements may be tax free if you pay qualified medical expenses. See Qualified medical expenses , later.

    Any unused amounts in the HRA can be carried forward for reimbursements in later years.

    Qualifying for an HRA

    HRAs are employer-established benefit plans. These may be offered in conjunction with other employer-provided health benefits. Employers have complete flexibility to offer various combinations of benefits in designing their plan. You do not have to be covered under any other health care plan to participate.
  • I am having a similar issue.  Both my husband and I contributed the max into our HSA's  Our employer also contributed seed money to the account.  We did not have any excess.  I downloaded our W2, and the amount appeared in box W.  Why is Turbo Tax tellng me I have an excess contribution?
  • I cannot tell you why TTx indicates excess without your amounts and some other info.
    How much is excess?
    Age 55+?
    Employer seed in W2 amount?

    W2 Contibutions, box 12, code W, should not be enter anywhere except with W2 entry.
    You must have HDHP coverage.
    You must not be covered by Medicare.
  • Thanks rababb- I actually figured it out.  I had not selected HDHP coverage and when I did, it fixed the issue.  Thanks for replying!
  • Great!
Cancel
The amount your employer contributed should be on your W2 Form, Box12, Code W.  TTx will make sure you have all forms completed for the HSA by picking up his amount when you enter your W2. You will be prompted for any follow-up questions needed to complete your tax return.
  • what if the only form you get is the w2's?
  • Then enter W2 forms.
  • Question - Turbo tax asks you to input what the employer paid to HSA but they only contributed 1K while I contributed 2K -    Box 12 shows the combined contribution. Employer paid only 1k so isnt that what should be entered on Turbo Tax?  The wording is very confusing.....
  • If the only contributions to your HSA were made by you and/or your employer (W2, box 12, code W), then the only place in TTx to enter this is where you show it on your W2 form. All the other contributions asked for in the HSA section are after tax contributions. Do not confuse the two.
  • The amount in 12b can be the total amount contributed by both the taxpayer and the employer.  However, TTX does not ask you to apportion the amount between what the taxpayer contributed and what the employer contributed.  This causes errors in form 8889.  Line 2 should be the employee contribution, and line 9 should be the employer contribution.  I had to go into the W2 and change the amount in 12b to employee contribution amount, and then this amount gets transferred to Line 2 of Form 8889.  Then in Line 9, I had to input the amount contributed by the employer.  Was this not correct?  Shouldn't TurboTax ask you what amount in 12b is employee contribution and what amount is employer contribution?
  • That is NOT correct.
    Line 2 is for any contributions other than from your employment. It specifically say "Do not include employer contributions, contributions through a cafeteria plan, or rollovers".
    Line 9 is the total amount from box 12, code W (employer contributions).
  • From the IRS Instructions for Form 8889:
    Include on line 2 only those amounts you, or others on your behalf, contributed to your HSA. Also, include those contributions made from January 1, 2013, through April 15, 2013, that were for 2012. Do not include employer contributions (see line 9) or amounts rolled over from another HSA or Archer MSA.

    So Line 2 is what the Taxpayer contributed, and Line 9 is what the employer contributed.  It doesn't say  to exclude contributions from employMENT, but rather from employER.
  • The confusion is all because the IRS uses the term EMPLOYER on W2 amount.
    Line 2 can be any contribution to your account other than what is shown on your W2 in box12. You will see these entries in the TTx HSA interview. It shows three amounts. The first is from your W2 (you can't change it because it comes from your W2 entry), the second is employer (not the amount on W2, confusing) and the third is all other. It is the second and third that will appear on line 2.
    Line 9 is your box 12 amount in total. It says EMPLOYER on the form.
  • Found this on hsaadministrators.info Web site, that seems to support your statement:
    The most common question about HSA contributions is “What should be reported in Box 12?”

    The confusion stems from the label of “employer contributions.” Both the employee and employer contributions should be showing in box 12, code W.   IRS Publication 969, for tax year 2008 ( page 10)  indicates that contributions made by the employer via salary reduction are not included in the employee’s  income.  Contributions to an employee’s account by an employer using the amount of  an employee’s salary reduction through a cafeteria plan are treated as employer contributions.  Thus the total is displayed on the W2.

    Therefore, the amount in Box 12 will include all of the employee payroll deductions and any employer money contributed. This is PRE-TAX money and gets reported on Form 8889 (required of all HSA account owners) as an EMPLOYER contribution (Line 9). Because there were no taxes deducted form this amount the employee/taxpayer cannot deduct it from gross income.

    However, if the employee were to send money directly to the HSA, that amount would be reported on line 2 of Form 8889. The total of lines 2 and 9 cannot exceed the maximum annual contribution limits set by the IRS for the applicable tax year.

    So, the government provided confusing instructions?  How can that be? :)  Thanks!
  • Yes. I have posted that reference on another thread awhile ago. Thanks.
  • I've read through all the comments on this issue and I'm still not clear on how to fix it in TTx. TTx automatically pulled my W2 info which included the 12 b W info of employee contribution to HSA that is showing up as employeer contribution on the 8889 form. Is there a way to adjust this? It keeps coming up as an error in TTx.
  • What kind of error?
  • This is what I am seeing:
    "Check This Entry
    Form 8889-T: Line 12 Wks, line B  should be blank. There are no Excess Employer Contributions. Adjustments to employer contributions should be entered on line E of the Line 9 Smart Worksheet.
     
    Line 12 Wks, line B  $$ "  (this is pulled from my w2)

    I dont understand why it's listed on my W2 box 12 B and not pulled into form 8889.
  • Let me ask. You only have box 12, code W contributions, correct? And the only place you have entered this amount is with the W2; no where else, correct?
  • correct
  • It looks like TTx has created excess contribution forms and worksheets. This could have happened if you had (at one time) entered your W2 amount in the HSA, MSA Contribution interview. Sometimes TTx doesn't clear out all the data when the user goes back and negates answer.
    But, this is just a guess.
    If you have the desktop version of TTx, you can view the forms and worksheets which may help find the source.
    If you are using the online version and you cannot edit the worksheet entry to be blank, you can try deleting Form 8889 and Form 5329. Then redo the HSA interview.
    I wish I had a better suggestion but it seems like the wires have gotten crossed.
  • I figured it out. I needed to delete the 8889 form and restart the income section because I hit a wrong button when initially going through the screens. This fixed the problem and I was able to file.
  • Ok. That's great.
  • the dbpotts rababb conversation was EXTREMELY helpful thank you VERY much. I had the exact same confusion.
Cancel
Contribute an answer

People come to TurboTax AnswerXchange for help and answers—we want to let them know that we're here to listen and share our knowledge. We do that with the style and format of our responses. Here are five guidelines:

  1. Keep it conversational. When answering questions, write like you speak. Imagine you're explaining something to a trusted friend, using simple, everyday language. Avoid jargon and technical terms when possible. When no other word will do, explain technical terms in plain English.
  2. Be clear and state the answer right up front. Ask yourself what specific information the person really needs and then provide it. Stick to the topic and avoid unnecessary details. Break information down into a numbered or bulleted list and highlight the most important details in bold.
  3. Be concise. Aim for no more than two short sentences in a paragraph, and try to keep paragraphs to two lines. A wall of text can look intimidating and many won't read it, so break it up. It's okay to link to other resources for more details, but avoid giving answers that contain little more than a link.
  4. Be a good listener. When people post very general questions, take a second to try to understand what they're really looking for. Then, provide a response that guides them to the best possible outcome.
  5. Be encouraging and positive. Look for ways to eliminate uncertainty by anticipating people's concerns. Make it apparent that we really like helping them achieve positive outcomes.
Cancel