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  1. #1
    Join Date
    Apr 2014
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    Default Re: Taxes for a Health Savings Account 2

    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?

  2. #2
    Join Date
    Nov 2013
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    Pennsylvania
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    Default Re: Taxes for a Health Savings Account 2

    Quote Quoting c627627
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    Thank you.
    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.

  3. #3
    Join Date
    Apr 2014
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    11

    Default Re: Taxes for a Health Savings Account 2

    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....

  4. #4
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    Nov 2013
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    Pennsylvania
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    Default Re: Taxes for a Health Savings Account 2

    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.

  5. #5
    Join Date
    Jul 2007
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    Florida
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    Default Re: Taxes for a Health Savings Account 2

    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.

  6. #6
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    Nov 2013
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    Pennsylvania
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    Default Re: Taxes for a Health Savings Account 2

    Very interesting Bubba. OP, your tax professional might want to review IRS guidelines before preparing any more returns. The IRS guidelines specifically state that cafeteria plan funds must be shown.

  7. #7
    Join Date
    Apr 2014
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    11

    Default Re: Taxes on a Health Savings Account

    I used the words "Tax Professional" to describe a conversation with whoever answered a Jackson Hewitt Tax Service phone number, the conversation being me expressing concern that there are no HSA contributions listed on the W2 form, and asking wouldn't they need those to be brought over as part of any documentation? I could have just as easily called the H&R Block number right across the street from them... which I may still do out of curiosity what other "Tax Professionals" may say. Both are national chains, who would you guys suggest to call and ask?


    It appears that you guys are all in agreement that ALL contributions made by an employer MUST BE reported on W2 form and that there is no such thing as an HSA contribution not having to be reported on the W2 form.


    Here's a good question that comes out from that: How does the following affect a person's return:

    A. Without W2 information, use only forms sent by the Bank regarding HSA Contributions and Distributions, to get Tax benefits
    vs.
    B. With W2 clearly stating employer contributions doing the same

    In the end how do both affect the bottom line of your Tax Return?

    I understand that an employer would do one or the other for many reasons, their own self interest being one of them but in doing so, are they negatively affecting the government's share of the taxes or both government's and the person filing?


    I guess I am asking this: If I am using accurate and true Bank information on exact amounts contributed and withdrawn, how does it affect me if an employer refuses to fill out Box 12 listing how much they deposited into an HSA account?

  8. #8
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: Taxes on a Health Savings Account

    Quote Quoting c627627
    View Post
    I used the words "Tax Professional" to describe a conversation with whoever answered a Jackson Hewitt Tax Service phone number, the conversation being me expressing concern that there are no HSA contributions listed on the W2 form, and asking wouldn't they need those to be brought over as part of any documentation? I could have just as easily called the H&R Block number right across the street from them... which I may still do out of curiosity what other "Tax Professionals" may say. Both are national chains, who would you guys suggest to call and ask?


    It appears that you guys are all in agreement that ALL contributions made by an employer MUST BE reported on W2 form and that there is no such thing as an HSA contribution not having to be reported on the W2 form.


    Here's a good question that comes out from that: How does the following affect a person's return:

    A. Without W2 information, use only forms sent by the Bank regarding HSA Contributions and Distributions, to get Tax benefits
    vs.
    B. With W2 clearly stating employer contributions doing the same

    In the end how do both affect the bottom line of your Tax Return?

    I understand that an employer would do one or the other for many reasons, their own self interest being one of them but in doing so, are they negatively affecting the government's share of the taxes or both government's and the person filing?


    I guess I am asking this: If I am using accurate and true Bank information on exact amounts contributed and withdrawn, how does it affect me if an employer refuses to fill out Box 12 listing how much they deposited into an HSA account?
    I will try to explain.

    In box 1 of your W2, your income is shown minus 401k contributions, minus health insurance contributions and minus HSA contributions. Therefore, you cannot take a deduction for your HSA contributions, but if you took a distribution, and did not use it for health care costs, that money reported in box 12 would become income.

    If there is nothing reported in box 12, that would normally indicate that your HSA was not an employer sponsored plan, and that it was funded by you, separately, with after tax income, and therefore the contributions would be deductible, because your box 1 income would NOT be reduced by the amount contributed to the HSA.

    Therefore, unless your employer actually counted the contributions THEY made, as income to you in box 1 (which would be a ridiculous thing for them to do, since it would cost them extra employer taxes to do that) your employer has done the W2 wrong. If they did make such a dumb mistake as counting the contributions they made as income to you, then it would be the same as you making all of the contributions yourself, and you would get the full deduction for all of the contributions. It would however, still be wrong for them to do it that way.

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