It IS possible for an employee to contribute after-tax money to an HSA. Not saying that's what happened here but it can be done.
Thank you for posting.
Box 12 on the W2 has the word 'Code' in it and nothing else.
I was going off of actual deposits employer made into the HSA account.
Interestingly, nothing like that is on the actual W2 but I just found out that supposedly banks are supposed to mail you some sort of a Form 1099-SA that spells out HSA bank account activity for tax purposes, is that correct?
Your employer is REQUIRED to identify funds that were put into your HSA on the W2, no? Sounds like you need a revised W2.
Thank you.
Employer said "It is not a 'Cafeteria Plan' so we don't have to include it on W-2 Forms."
But the Bank said they will be sending out 1098 and 1099 forms later in the month, and have no information what forms for what individual accts will be sent out, basically said to wait a couple of weeks to see what comes in the mail.
What are the implications of employer funding an HSA account and not including that in W2 forms vs. companies that do include that in W2 forms as far as the bottom line goes for employees?
There is no "option" to not include it. It is a requirement of tax law that HSA contributions be listed on your W2. If you have an HSA and your W2 does not include those contributions, your W2 is invalid as it is inaccurate and you need to get a new one.
You must account for all distributions OUT of your HSA in order to avoid paying income tax on those distributions which are technically income. You do not have to pay tax on them provided those distributions are used for qualified expenses, i.e. healthcare costs. But it is YOUR responsibility to prove to the IRS that those distributions were used for qualified expenses.
All right. This means I have a situation, since I've spoken to the person in charge of the company's W2 forms.
Fact is that they DID make contributions into the HSA account.
I asked twice and was told that they DO NOT report this on the W2 form. Once again explanation is "It is not a 'Cafeteria Plan' so we don't have to include it on W2 Forms."
The question now becomes what to do if employer refuses to issue a W2 form with this information. To that end, someone already mentioned earlier in the thread about theoretical existence of after-tax HSA contributions.
Either way, I assumed myself that as you said "There was no 'option' to not include it" and that this would be a simple matter of re-issuing a corrected W2 form. Did not expect this turn of events... any advice is appreciated.
EDIT: I called a Tax Service Professional who said that there are HSA plans which are not required to be reported on the W2 forms.
All I can do is wait for any forms to come from the Bank and get further info on this....
While there might be certain HSA plans not required to be reported on your W2 (I'm not aware of those), you will need to get the list of distributions from the bank and justify all of those on our tax return. Basically, all HSA money you spend is treated as income and the burdon of proof is on your to show the IRS that those distributions were used for qualified payments and therefore not taxable. You can do that based on the account statements from the bank.
Re: your edit. Read this: http://www.irs.gov/instructions/iw2w3/ch01.html#d0e3123
What your "tax service professional" is telling you is that there are HSA plans that allow an employer to violate the IRS' instructions. I'd be very curious what plans those are. The IRS permits anyone to make contributions to an individual's HSA on that person's behalf, and the individual can deduct the amount contributed to an HSA up to the permitted limit each year. The only contributions that an employee cannot deduct are those an employer makes on the person's behalf. Employer contributions to an HSA must be listed on an employee's W-2 form according to the IRS' instructions, and they are not counted as income.
Also, you can review IRS Pub. 969 - focus on what the IRS says an employer "must" do regarding the W-2... http://www.irs.gov/publications/p969...link1000204101
You must report the contributions in box 12 of the Form W-2 you file for each employee. This includes the amounts the employee elected to contribute through a cafeteria plan. Enter code “W” in box 12.