Employer Contributed HSA on W-2

[zeros]

When I see an amount for this contribution on the W-2, what needs to be done?

[Jesse]

If memory serves me correct - fill out federal form 8889. You need to make sure the taxpayer had a qualifying high deductible health plan and the total between employer contributions and employee contributions are within plan limits depending on single or family plan.

Also check your state codes. In Wisconsin for example we need to add back into income any qualified HSA contributions both by employer and employee plus the interest earned in the HSA account.

[ChEAr$]

Hsa

When I see an amount for this contribution on the W-2, what needs to be done?

is different. A client called me with question just today, so I looked in ye olde TaxBook(tm)
and saw that nothing happens. Unlike that other plan, amounts contributed by employer just pile up and don't become income unless employee leaves. It's not a question of
having to add income every year in which the whole amount is not spent.

[Jesse]

But keep in mind if the taxpayer is making contributions also you must reduce the amount the taxpayer can contribute to their HSA by the amount of any contributions made by the employer that are excludable from their income.

I ran into this last year, the taxpayer contributed the max amount, but the employer was also contributing $50 a month so the taxpayer actually ended up over-contributing by $600.

I don't think it automatically becomes income to the taxpayer if the employee leaves, unless they have contributed too much under the special rules for not remaining an eligible individual during the 12-month testing period.

If I'm incorrect someone will chime in. Search the IRS website for HSA's they have some great information and examples to follow.

[joanmcq]

In CA, the amount has to be added to wages for state purposes since CA doesn't conform.