HSA Tax Information for SMBs

Tuesday, December 18, 2007
Posted by John Beagle

by Mary Black, Nenni and Company
The employee contribution to the SMB HSA is taxable thru payroll, unless plan is a section 125. 

If employee portion is taxed thru payroll, they can deduct on their federal tax return, which in turn is deducted on their state return.
The employer contribution to the HSA is not taxable, but is reportable on the employees W-2 in box 12, letter W.  The employer should report this as "Employee Benefits".  You also must report the employee amounts thru a Section 125 plan in box 12, letter W.

If the employer pays the "Health Insurance" Premiums portion for the employees, this is not taxable as long as it is a "Group Plan".  The employer deducts as Health Insurance. If it is "Individual plans", then it's taxable to the employee as wages, and the employer deducts as Wages.

Here are some SMB employee and employer concerns:

What are the excluded HSA Expenses?
What are the HSA Contribution Limits?
Is an HSA Taxable to the Employee or Employer?

What are some HSA things I should know?

End of Part 1 in 10 Year Case Study on an SMB