Help Me With Employer HSA Contribution Questions

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Dear Brass Tax Presentations,

When the owner of an S-Corp makes an employer HSA contribution. How is it treated on the shareholder’s personal tax return?

Thank you!


From Brass Tax Presentations

If an S-Corp makes employer contributions to the HSA of a 2% or more shareholder-employee, the employers contributions are added to the W-2 in Box 1 (not subject to FICA). It’s the same principle that applies for shareholder health insurance premiums. See IRS Notice 2005-8 if you’d like to do some more reading on this.

Keep in mind that if the W-2 was already issued and this amount was not included in Box 1, the W-2 needs to be corrected. The employer HSA contribution for the shareholder is not deductible on Form 1120S. It has to be reported this way or the IRS can disallow the deduction.

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