Who paid "W"?

[Black Bart]

Strange thang about HSA contributions ($1,000) -- W2, box 12: when code "W" is selected, the ATX program says "Contributions to a Health Savings Account." Doesn't say who did the contributing. But then the program takes that figure straight over to the 8889 worksheet and automatically plugs it into employer contributions line (which says "enter the employer contributions reported in box 12 of Form W2, with code W"). Okay, I'm willing to take the program's word that the boss put the money in.

But....now I'm looking at the guy's annual company-issued HSA statement which lists $1,000 worth of payroll deductions And it says "Payroll deductions for the HSA account (which add up to $1,000) will be shown on the W-2 in Box 12 marked code "W". That is to say, I assume, that the employee paid the "W" amount.

So, one of us is nuts: me, the company, or ATX. Any opinions (not too harsh, please-it's been a rough week)?

[Bill Tubbs]

Code W

You can't tell just by looking at the W-2 who funded the HSA -- the description for code W on the back of the W-2 says "Employer contributions (including amounts the employee elected to contribute using a section 125 (cafeteria) plan)".

Basically, any amounts with code W are already tax-advantaged and are not eligible for a (another) deduction on the 1040.

[bgiez]

from TTB p 29-10

TTB p 29-10 "Employer contributions. Contributions made by an employer
are not included in the employee’s income and are not deducted
by the employee on the employee’s tax return. Contributions to
an employee’s account by an employer using the amount of the
employee’s salary reduction through a cafeteria plan are treated
as employer contributions."

I would guess that the employee's contributions were deducted pre-tax, so your program is handling things correctly.

[Possi]

My program is not?

This must have happened with an updated version of TW because usually a box 12 code W will NOT trigger the 8889.

It is giving the taxpayer an adjustment for contributions, so I must be doing something wrong. If it is coded W, isn't that considered a "cafeteria plan" and that total does NOT get entered on the 8889 line 2?

I have had a ton of these, and I know if it is paid in pre-tax $ it is not deductible. I think the 8889 is just popping up in case there were distributions that needed justification. Ya think?

[bgiez]

not necessarily

This must have happened with an updated version of TW because usually a box 12 code W will NOT trigger the 8889. It is giving the taxpayer an adjustment for contributions, so I must be doing something wrong. If it is coded W, isn't that considered a "cafeteria plan" and that total does NOT get entered on the 8889 line 2?

I have had a ton of these, and I know if it is paid in pre-tax $ it is not deductible. I think the 8889 is just popping up in case there were distributions that needed justification. Ya think?

It could also include the employer's contribution; pre-tax contributions are considered as made by the employer for reporting purposes.

The 8889 not only gives you a chance to report distributions and confirm whether or not the distributions exceeded the qualified unreimbursed medical expenses, but also a place to report whether it's a single or family plan (so no excess contributions were made), and a place to make post-tax contributions which will end up as an adjustment on the front of the 1040.

Now that I have my own HDIP and HSA I am understanding this more and more.

[Bonnie]

I've been seeing more and more W-2s with W in box 12 and Tax Slayer gives a message that indicates I need to fill out the 8889 and when I go to that form it puts the amount from box 12 on line 9. The first two returns I had with HSA contributions also had distributions for medical expenses so I did fill out the form. Yesterday and today I had contributions in box 12 but not distributions so was wondering if I still needed to fill out the 8889. Reading in TB 13-30 under Form 8889 it says use this form to report all contributions to an HSA including employer contributions. This leads me to believe we have to fill out this form every time we have a W-2 with code W in box 12. Is this correct?

[bgiez]

I haven't had any contributions without distributions, so

I've been seeing more and more W-2s with W in box 12 and Tax Slayer gives a message that indicates I need to fill out the 8889 and when I go to that form it puts the amount from box 12 on line 9. The first two returns I had with HSA contributions also had distributions for medical expenses so I did fill out the form. Yesterday and today I had contributions in box 12 but not distributions so was wondering if I still needed to fill out the 8889. Reading in TB 13-30 under Form 8889 it says use this form to report all contributions to an HSA including employer contributions. This leads me to believe we have to fill out this form every time we have a W-2 with code W in box 12. Is this correct?

I can't base my answer on my experience, but I think you answered your own question. Perhaps it's similar to 8606 as a way to keep track of contributions.

The 8889 does several things, one of which is to make sure that no excess contributions have been made. Also, if someone takes advantage of the "last month rule" whereby they can put in a whole year's contribution as long as they had a HDIP in the first day of the last month of the year, but fails to have a HDIP for all of the following year, or switches from family (higher allowable contribution amount) to individual HDIP (lesser allowable contribution amount), the excess contribution can be determined.