HSA and form 8889

[Bonnie]

Anyone have customer with HSA account. Have not dealt with this in the past. W-2 shows 2550 in box 12 with code W which then triggers the 8889 form. Taxpayer says that of the 2550 included in box 12 he contributed 1000 and the other was contributions of his employer. The family used 2037 out of the HSA account to pay medical expenses. thanks for any help as I don't understand the 8889. I've tried reading instructions and TB but still not sure what goes on which line.

[Matt Sova]

Hsa

Employer contributions go Pt I line 9. I think my software pulls this directly from the W-2. If an employee makes other contributions they would go on line 2 and also on page 1 of the 1040. Their $1000 were probably pre tax dollars so they will not go to page 1 of the 1040.

The distributions go to Part II line 14a. If they were all for medical expenses you put the same amount on line 15 so nothing is taxable.

[Traveling EA]

Hsa's

The taxpayer also has to indicate on the 8889 the type of plan. It would either be an individual or family plan. One of the often overlooked feature of the HSA's, is that similar to an IRA, contributions to the HSA can be made up to April 15th. The taxpayer is under the amount that can be put into the plan for 2012. It winds up to be a medical IRA - this is especially valuable for someone who cannot do a deductable IRA.

[BP.]

contributions to the HSA can be made up to April 15th.

More clients are doing this, especially after we see how the tax return is looking.

[Gary2]

Anyone have customer with HSA account. Have not dealt with this in the past. W-2 shows 2550 in box 12 with code W which then triggers the 8889 form. Taxpayer says that of the 2550 included in box 12 he contributed 1000 and the other was contributions of his employer. The family used 2037 out of the HSA account to pay medical expenses. thanks for any help as I don't understand the 8889. I've tried reading instructions and TB but still not sure what goes on which line.

Because of the older wording on the W-2, there's a tendency to think that you need to worry about how much of the code W amount came from the employer and how much came from the employee, but in fact, you don't. It's simpler to think of it as "all pre-tax contributions to the HSA put there by the employer, regardless of whose funds it came from."

The 2009 W-2 Instructions for Employee, for code W, just says "Employer contributions", which is what's confusing. The 2012 W-2 adds "(including amounts the employee elected to contribute ... using a cafeteria plan)." I think the clarification was first added in 2011, but it may have been 2010.

In theory, the employee should also have received a 5498-SA, showing the contribution details.