Just because your employer is required by law to provide you with a correct W-2 showing all of your wage and tax information pertaining to your job doesn't mean that this will always be done. If your employer doesn't give you a form that shows your HSA contributions correctly, you need to have the form revised. A correct W-2 helps ensure that you don't exceed your yearly allowable contributions to your HSA.
Employee Contributions Through Payroll
Any of your own qualifying contributions to your HSA as an employee through payroll deduction that aren't made through a cafeteria benefit plan are subject to all of the normal income tax withholdings for state, federal and Social Security taxes. Since these contributions aren't made before taxes, they shouldn't be reported on your W-2 form.
In most situations, your employer's contributions to your HSA are excludable from your income, and therefore don't need to be shown as income, or wages on your W-2. However, all employer contributions to your HSA must be reported in box 12 of Form W-2, with the code "W." Your contributions, added to your employer's contributions, can't exceed the allowable maximum contributions for the year, or you face penalties for the excess withdrawal.
Correcting the W-2
If you receive a W-2 that doesn't have the contributions listed correctly, request a corrected W-2 form. Call the IRS and initiate a W-2 form complaint. The IRS will notify your employer that it must issue a corrected W-2 form within 10 days. The IRS will also send you a Form 4852 to use as a substitute W-2 form, as well as the instructions for completing this form. Provide your employer's address, your own identifying information and your employer's tax I.D. number if you have it.
Deducting the HSA Contributions
If you're covered by a high-deductible health plan, your contributions to your HSA account may be deductible from your income on your federal tax forms. Complete Form 8889 to determine the deductible amount of your contribution. Enter the total deduction from it onto your Form 1040 on line 25.
- Internal Revenue Service: General Instructions for Forms W-2 and W-3
- Internal Revenue Service: Publication 969 -- Health Savings Accounts and Other Tax-Favored Health Plans
- Internal Revenue Service: W-2 -- Additional, Incorrect, Lost, Non-receipt, Omitted
- Internal Revenue Service: Form 8889 -- Health Savings Accounts
- Internal Revenue Service: Form 1040 -- U.S. Individual Income Tax Return