W-2 Box 12 Code W

[msbdot]

Should box 12 include both employer and employee contributions to an HSA (under a cafeteria plan)? If so, since employee contributions only are deductible on the employee's 1040, how will the employee know the correct amount of his deduction to use on his 1040?
Thanks
Sandy

[RLymanC]

Hsa

Box 12 Code W will be the employer's contributions only, this flows to Form 8889 line 9
Form 8889 Line 2 you enter the employee contributions.

He will have to look at his year end pay stub, hopefully his HSA contributions will be there, and hopefully the totals will not exceed the contribution limits.

[Burke]

Should box 12 include both employer and employee contributions to an HSA (under a cafeteria plan)? If so, since employee contributions only are deductible on the employee's 1040, how will the employee know the correct amount of his deduction to use on his 1040? Thanks Sandy

It is not clear from your post if you are talking about a Sub S corp and a more-than-2% shareholder. Those W-2's are treated differently.

In a regular corporation/employee situation, the HSA amts paid in by the employee are not taxable and not included in Line 1 as taxable wages. Therefore, there is no deduction on 1040. RLyman is correct in that only the employer contributions are shown as Code W on the W-2.

For a more-than-2% shareholder in a Sub S, the HSA deductions made by the employee are included in Line 1 as taxable wages, so that he may then deduct them on his 1040, much like health insurance paid by the Sub S. Because 2% shareholders of S corps are not treated as employees for this purpose and the value of the health benefits are includible in the shareholder's income, the amount is not reported on Line 12 (code W) as an employer contribution.

[AJsTax]

Combined amounts

Box 12 must include both the employer's and employee's pre-tax contributions to a HSA. Many do this wrong!
copied from W-2 instructions:

"You must report all employer contributions (including an employee's contributions through a cafeteria plan) to an HSA in box 12 of Form W-2 with code W. Employer contributions to an HSA that are not excludable from the income of the employee also must be reported in boxes 1, 3, and 5. (Use box 14 if railroad retirement taxes apply.)"