HSA and tax reporting (HDHP premium)

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Topic Author
SuperImp
Posts: 2
Joined: Mon Feb 03, 2014 9:47 pm

HSA and tax reporting (HDHP premium)

Post by SuperImp »

Hi all, been lurking but finally had a question that has been on my mind for a while. I posted this to TurboTax community forum too since I was wondering if anyone else was in the same boat and got a few replies.

Last year (2012 taxes), my pre-tax HDHP premium fees were categorized under 'Other Café 125' (reference notes on W2). As usual, it was deducted from gross salary and was not included in Box 12 Code W. This year, my company mentioned there was a change with the reporting.

My W2 for 2013 now has my pre-tax deductions for the HDHP premium as 'Café 125 HSA' (reference notes on W2). They created a new description for HDHP premiums. Only my employer contributes directly to the HSA. I don't contribute to the HSA account (0%), but I do pay the HDHP premiums by pre-tax deductions (payroll). This fee (deduction) is now added to my Box 12 Code W.

Basically, my Code W includes the employer contributions + the pre-tax deduction amount for the premium. The 'Café 125 HSA' is still deducted from my gross as normal. The discrepancy is now on the Code W line.

I was under the assumption that only employer/employee contributions (including pre-tax cafeteria elections, but excluding HDHP premiums) went on Box 12 Code W.

In doing so, doesn't this skew the 8889 form (Line 9)? Usually Code W transitioned to that form. Do I leave that number now or do I subtract the 'Café 125 HSA' value so it only shows the actual contributions?

I figured if I adjusted the 8889, the W2 would show a different value and this might possibly be flagged for discrepancies? I'm not doing my taxes yet btw, so I have plenty of time to research.

Any ideas? I talked with my company and they believe it's reported correctly. I've talked with a tax consultant and they don't believe the HDHP payroll deducted premium fee should be listed (appended on code w) since none of the money actively touches/contributes to the health savings account.

Plus, the 5498-SA form released later this year by the financial institution should ideally match W2 Box 12 Code W and 8889 (line 9) ideally. This is assuming I don't have any post-tax contributions or other sources of employer/pre-tax employee contributions from other jobs - I don't btw.

I plan to give the IRS a call this week and touch base with a few other tax consultants to see their thoughts. I also got a few replies on the TurboTax forum in which someone had a similar issue to mine.

https://ttlc.intuit.com/questions/20517 ... w_question
bberris
Posts: 2412
Joined: Sun Feb 20, 2011 8:44 am

Re: HSA and tax reporting (HDHP premium)

Post by bberris »

It looks like a payroll fail to me. My w2 shows line 12W with HSA contributions, employer + payroll deduction as one number. No insurance premium included there. Line 12DD shows the cost of employer sponsored health care. I contribute to this as well but I don't know if the figure includes my payroll deduction. 12DD is not taxable, its a way for irs to know you have insurance.

It took a few years for my company to get this right, so expect a corrected w2.
HouseStark
Posts: 324
Joined: Mon Oct 15, 2012 2:31 pm
Location: Minneapolis, MN

Re: HSA and tax reporting (HDHP premium)

Post by HouseStark »

W-2 code W should report HSA contributions, both by the company and by the employee via payroll deduction (Sec 125). It absolutely should not report health insurance premiums paid, either the company or the employee share. The OP has it right. If it's not an HSA contribution, meaning it's not going into the employee's HSA, how can it be considered an HSA contribution?

Who does the company payroll? Is this some smallish company that does its own payroll? I can't believe any third-party payroll provider would make such an obvious error. The OP can't be the only one in the company with this situation. You need to talk to someone in the company who cares about getting this right. If the person responsible for payroll is defensive about being in the wrong, then it needs to go beyond them.

I would only report on the form 8889 the contributions that actually were made to the HSA, both combined company contribution and employee contribution via payroll deduction, if any. I wouldn't hesitate to have a discrepancy with the W-2 code W on the form 8889 because it is easy to establish what was actually contributed to the HSA, via the form 5498-SA and account statements. I would not compound the problem by knowingly entering an incorrect amount, since the company should be responsible for correcting the W-2. If you did enter the code W amount that includes contributions and insurance premiums paid, that could easily result in exceeding the HSA contribution limit.
Topic Author
SuperImp
Posts: 2
Joined: Mon Feb 03, 2014 9:47 pm

Re: HSA and tax reporting (HDHP premium)

Post by SuperImp »

Thx for the replies bberris and HouseStark. I agree with your responses. Man, such a headache it's been going back and forth with them. I'll be contacting the manager to see if she can offer more insight to getting this addressed.
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