24 June 2022 16:06

Should I include my employer’s HSA contributions on Line 21 (Other Income)?

Are employer HSA contributions included in income?

Employer contributions aren’t included in income. Distributions from an HSA that are used to pay qualified medical expenses aren’t taxed.

Where are employer HSA contributions reported?

Box 12

Short Answer: Both the employer and pre-tax employee HSA contributions made through payroll are reported on the Form W-2 in Box 12 with Code W. Employers must report all employer and employee HSA contributions made through payroll as a single aggregated amount on the employee’s Form W-2 in Box 12 using code W.

Do I need to report HSA contributions on my tax return?

Tax reporting is required if you have a Health Savings Account (HSA). You may be required to complete IRS Form 8889. HSA Bank provides you with the information and resources to assist you in completing IRS Form 8889 regarding your HSA.

Are HSA contributions included in adjusted gross income?

Individuals who contribute to HSAs may claim a deduction on their federal income tax return. It is an “above the line” deduction, which means that the deduction for HSA contributions is used in determining adjusted gross income (AGI).

How are employer HSA contributions reported on W-2?

While employer contributions to an HSA may be excluded from the employee’s income, all employer contributions, including those made by the employee through a cafeteria plan, must be reported in box 12 of the employee’s W-2.

Does employer contribution to HSA count towards limit 2021?

For 2021, individuals can contribute a maximum of $3,600, up from $3,. You can contribute up to $7,200 for family coverage, an increase of $100 from the previous year. The total HSA contributions from you and your employer cannot exceed the specified limits.

How do I record HSA contributions?

ANSWER: Employees with HSAs must file a Form 8889 (Health Savings Accounts (HSAs)) as an attachment to Form 1040 for any year in which they make or receive HSA contributions (including employer contributions), or for any year in which they take an HSA distribution.

Does W-2 Box 1 include HSA contributions?

Your HSA contributions are not subject to Income tax, Social Security Tax, or Medicare Tax; therefore, Boxes 1, 3, & 5 of your W2 have already been reduced by your $5,250 HSA Contributions.

How do employer contribution to a health savings account affect the insured’s taxes?

Contributions made by employers are exempt from federal income and payroll taxes, and account owners can deduct their contributions from income subject to federal income taxes. Further, any income earned on the funds in an HSA accrues tax-free, and withdrawals for qualifying medical expenses are not taxed.

Do employer HSA contributions reduce AGI?

HSA tax benefits
If your employer contributes to your HSA plan through payroll deductions, those contributions go in tax-free, reducing your gross annual income.

What should be included in Box 12 dd on W-2?

Box 12 amounts with the code DD signify the total cost of what you and your employer paid for your employer-sponsored health coverage plan. Code DD amounts are for informational purposes only—they don’t affect the numbers in your tax return.

Does Box 12 Code W include employer contributions?

The amount with code “W” in box 12 in your W-2 is the sum of the contributions your employer made and that you made through a payroll deduction scheme. However, the IRS, by default, assumes that these contributions are taxable until you complete the form 8889.

Is HSA employer contribution taxable?

Employer contributions to an HSA are not considered income and so they’re not subject to income tax or payroll tax.

Which box on W-2 shows HSA contributions?

Box 12

Employers must report all employer and employee Health Savings Account (HSA) contributions made through payroll as a single aggregated amount on the employee’s form W-2 in Box 12 using code W.

Do I have to report Box 12 dd on my tax return?

Individuals (employees) do not have to report the cost of coverage under an employer-sponsored group health plan that may be shown on their Form W-2, Wage and Tax Statement, in Box 12, using Code DD.

Is code DD on W-2 deductible?

Unfortunately, the answer to your question is no. The amount shown on your W-2, Box 12, using Code DD, represents the of the cost of pre-tax employer-sponsored health coverage, and is for your information only.

What does DD in box 12a mean?

Hello – Code DD in Box 12 is the cost that your employer paid for your Health Insurance. It is informational but it is not included in your tax filing.

What do I put for Box 12 on my taxes?

The W-2 box 12 codes are:

  1. A – Uncollected Social Security tax or Railroad Retirement Tax Act (RRTA) tax on tips. …
  2. B – Uncollected Medicare tax on tips. …
  3. C – Taxable costs of group-term life insurance over $50,000 (included in W-2 boxes 1,3 (up to Social Security wages base), and box 5); Taxable costs are information only.

How do you fill out Box 12 on W-2?

In each box 12 line, select the capital letter code from the drop-down list and enter the corresponding amount.
In this fictitious (and somewhat unrealistic) example, the W-2 shows these box 12 amounts:

  1. $5,000 in box 12a with code D.
  2. $5,000 in box 12b with code DD.
  3. $5,000 in box 12c with code W.
  4. Box 12d is blank.