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Add Employer-Funded HSA to Payroll
Posted: Sat May 18, 2024 7:03 pm
by Lolbkpr
Hello,
I found old posts that explain how to add the Employer-Funded HSA to payroll. It says to add it as a "Taxable Benefit" since it's not a deduction and we don't want it subtracted from the paycheck.
When I do this, I go to the drop down menu to add the code "W" to the Box 12, W does not come up as an option.
Should I enter it as an "Employer Liability" and if so, is it a 'non-tax item' and % calculation is "Gross Wages"?
Re: Add Employer-Funded HSA to Payroll
Posted: Sun May 19, 2024 12:29 am
by NeilZ
Lolbkpr wrote: ↑Sat May 18, 2024 7:03 pm
Hello,
I found old posts that explain how to add the Employer-Funded HSA to payroll. It says to add it as a "Taxable Benefit" since it's not a deduction and we don't want it subtracted from the paycheck.
When I do this, I go to the drop down menu to add the code "W" to the Box 12, W does not come up as an option.
Should I enter it as an "Employer Liability" and if so, is it a 'non-tax item' and % calculation is "Gross Wages"?
The tax rules have changed a bit. According to IRS Pub 15-B for 2024:
Employer contributions. Up to specified dollar limits,
cash contributions to the HSA of a qualified individual (de-
termined monthly) are exempt from federal income tax
withholding, social security tax, Medicare tax, and FUTA
tax if you reasonably believe that the employee can ex-
clude the benefits from gross income. For 2024, you can
contribute up to $4,150 for self-only coverage under an
HDHP or $8,300 for family coverage under an HDHP to a
qualified individual's HSA
So unless you're contributing more than the listed amounts, this is not a taxable benefit. So yes, this is an employer liability, and a non-tax item.
When setting it up in
Maintain Item Descriptions check the boxes for 'Non-tax item' and 'Report on W2'. The Box 12 code pulldown list will then show the 'W' for the Employer Contributions to the HSA.