HSA contribution question

[idahome]

I’m working on a payroll audit for my company and I have a question.

My company offers HDHP options so people can also contribute to and HSA. My company does NOT put any money into anyone’s HSA, so we only have employee contributions.

I noticed that all HSA contributions are set up as earnings (so increasing our gross income) and then they appear as a direct deposit into the appropriate account. If my employer contributed to the HSA then the employer contribution would have to be listed as an earning. I’m trying to find something that clarifies whether the employee contribution should appear as an earning. I looked in IRS Publication 969, but it didn’t really answer my question.

Are there any payroll/HR/tax people here who can point me in the right direction?

Thanks!

[awkwardpenguin]

Employee contributions should not be going into gross earnings. HSA contributions are pre-tax and should also be exempt from FICA.

[idahome]

awkwardpenguin: I thought as much. Is there any reference guide/material you recommend to support this? I’m going to need evidence to back up my assertion that we are doing things wrong.

Thanks!

[puppylove64]

Yep what awkwardpenguin said. Hsa contributions are like free money, no taxes or FICA.

[dottyblue]

Jun 1, 2020 19:38:51 GMT -5 idahome said:

awkwardpenguin : I thought as much. Is there any reference guide/material you recommend to support this? I’m going to need evidence to back up my assertion that we are doing things wrong.

Thanks!

Everything is detailed in the IRS Publication 15B:  www.irs.gov/pub/irs-pdf/p15b.pdf  You want the section for Health Savings Accounts under "Fringe Benefit Exclusion Rules"

Good luck!