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Level 1

HSA is not being deducted in 941

My husband and I are 50/50 partners in our SCorp.

 

We set up a HSA and deposited $3450. each at the end of 2018.  Total of $6900.

 

We did not deduct this out of each paycheck so I had to write two stand alone checks to pay the HSA on 12/26/2018.

 

When I run my 941, it is not deducting the HSA from taxable SS/MCR wages.

 

I set up the HSA the same way as my health insurance, and my health insurance is being added to wages and being deducted from SS/MCR on the 941.

 

The HSA is showing on our W2's in the correct box.

 

SO confused.  

 

 

 

 

 

 

Solved
Best answer 01-26-2019

Best Answers
Highlighted
Level 15

HSA is not being deducted in 941

@JamesDuanT

 

Please Learn from the input here.

 

@Sybil

 

HSA is Always reported through Payroll.

 

For regular employees, it is not taxable, but still reports on payroll reporting and the W2.

 

For "2% or more Shareholder" it is Taxable in payroll. Here is an example article:

 

Because you are a more than 2 percent shareholder, contributions by your S corporation to your HSA for services rendered are treated as guaranteed payments that your S corporation deducts as compensation to you.
For employment tax purposes, the S corporation treats the HSA contributions as wages subject to income tax withholding but exempt from FICA and Medicare taxes. Thus, both you and your S corporation benefit on the FICA and Medicare by having the HSA paid by the S corporation.
You, the shareholder-employee, deduct on your individual IRS Form 1040 the HSA payments that your S corporation added to your W-2 income. You complete your Form 1040 just as if you had made the payments personally. After all, that's what really happened when the S corporation included the HSA payments on your W-2.
In summary, have the S corporation pay your HSA so that you save payroll taxes. Then, claim the deduction on your Form I 040 by completing IRS Form 8889, which transfers the proper amounts to Form 1040.

 

 

@Sybil

 

You still have time to Fix 2018 and amend your filings.

View solution in original post

4 Comments
Highlighted
Moderator

HSA is not being deducted in 941

Hello Sybil,

 

HSA contributions are reported on the Form W2 - Box 12 and Form 940.

 

Company contributions to an HSA on behalf of your employee are excluded from gross income and wages for Federal Income Tax withholding, Social Security, Medicare, and FUTA. Thus, shouldn't show on the Form 941. You can also use these articles for reference:

We can pull up the Payroll Details report and compare it with your 941 report.

  1. Click Reports on the left menu and search Payroll Details.
  2. Compare it with your 941 report.

Let me know how this goes. I'll be around.

Highlighted
Level 1

HSA is not being deducted in 941

I checked other reports and found all of them to be correct.

So, as you said, the HSA funds do not appear on the 941 at all.

Not much information anywhere on the net about this topic.

Thank you for your help!

 

Highlighted
Level 15

HSA is not being deducted in 941

@JamesDuanT

 

Please Learn from the input here.

 

@Sybil

 

HSA is Always reported through Payroll.

 

For regular employees, it is not taxable, but still reports on payroll reporting and the W2.

 

For "2% or more Shareholder" it is Taxable in payroll. Here is an example article:

 

Because you are a more than 2 percent shareholder, contributions by your S corporation to your HSA for services rendered are treated as guaranteed payments that your S corporation deducts as compensation to you.
For employment tax purposes, the S corporation treats the HSA contributions as wages subject to income tax withholding but exempt from FICA and Medicare taxes. Thus, both you and your S corporation benefit on the FICA and Medicare by having the HSA paid by the S corporation.
You, the shareholder-employee, deduct on your individual IRS Form 1040 the HSA payments that your S corporation added to your W-2 income. You complete your Form 1040 just as if you had made the payments personally. After all, that's what really happened when the S corporation included the HSA payments on your W-2.
In summary, have the S corporation pay your HSA so that you save payroll taxes. Then, claim the deduction on your Form I 040 by completing IRS Form 8889, which transfers the proper amounts to Form 1040.

 

 

@Sybil

 

You still have time to Fix 2018 and amend your filings.

View solution in original post

Highlighted
Level 15

HSA is not being deducted in 941

You need to Read the article provided.

 

"Amounts employers contribute to employees' HSAs are generally not subject to employment taxes. Employers must report the contributions in box 12 of Form W-2 for each employee. This includes the amounts the employee elected to contribute through a cafeteria plan. Enter code "W" in box 12." = Nontaxable Fringe Benefit to "regular" employees that at most are less than 2% shareholders.

 

"If you are a regular or fully taxable S-Corp participant and would like to have a company contribution to HSA, the amount is taxable to FIT/SIT only, regardless of whether it is offered to other employees. The Company HSA Contribution amount needs to be included with the S-Corp item amount and will get reported on the W-2 in Box 14 as S-Corp, and does NOT report to Box 12 Code W." = Taxable Fringe Benefit to 2% or more Shareholders.

 

In Both Examples, it is part of payroll.

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