HSA Contributions reported on W-2

[Wendy K]

Code W on W-2 on my client's W-2 includes both the employer and employee's contributions. ProSeries is calculating tax due on "excess contributions" when I complete the 8889 forms, even though no excess contributions were made. How do I correct?

[Just-Lisa-Now-]

Thats not what its doing.  You need to open the 8889 and check the Self or Family boxes in the smart worksheet below Line 2.  Do not enter any figures on the 8889, just check that box and the errors should clear

If youve been in the 8889 and marking boxes and inputting figures, just delete the form and start over

[470pitt]

But if you do not put the amount the employee contributed he gets not HSA deduction but if he contributed $6500 and the program is taxing him for excess contributions but he can do $7000.  Thank You

[sjrcpa]

Your client does not get a deduction for any amount shown on the W-2. The employee share was pretax, or it wouldn't be Code W on the W-2.

[Just-Lisa-Now-]

They already got the deduction on the W2, they dont get the deduction again....thats why it shows as excess.

How much is shown on the W2 Code W?  How much did he contribute outside of payroll, on his own?

[470pitt]

on the W-2  W is $6500.00 but he is saying he put that it

[Just-Lisa-Now-]

and you should see that Box 1 of the W2 is lower than Box 3...so theyve already got the deduction for that contribution.

[470pitt]

Yes box 3 is lower but only by the amount of the 401K D amount

[Just-Lisa-Now-]

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@470pitt wrote:

Yes box 3 is lower but only by the amount of the 401K D amount

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Box 1 should be lower than Box 3/5 by the 401K (D) and HSA (W) amounts, or the employer needs to issue a corrected W2.  Im wrong, but you may see the difference in the state wages, some states dont conform to the tax deduction.

Anything that gets contributed through payroll should be included on the W2, you dont enter that again on the 8889.

[rbynaker]

HSA contributions are pre-tax for both taxable wages and for SS/MC wages so using box 1 vs box 3 (or box 5) will not tell you if the HSA is pre-tax.  Get the year-end paystub.  Do the math on gross pay to taxable wages.  You'll subtract out (typically) health insurance, dental, vision, etc., FSA and HSA to get from gross to W-2 box 5, then subtract 401(k) to get to box 1.

Rick

[chasetax]

can you ask taxpayer to furnish the 5498-SA statement for 2019? it should show total contributions--then subtract code W from total!

[sjrcpa]

That'll work unless there are timing differences- December 31, 2019 payroll deduction not hitting the HSA account until January 2020, for example.