How To Report Your W-2, Before Year-End

How To Report Your W-2, Before Year-End

The year-end is just around the corner, so it’s time for some year-end tax and reporting issues for business owners, especially S Corporations.

Your payroll department or company has probably already provided you with an exhaustive multipage document that discusses every possible item that could be required on the W-2.  Here are the most common items.  S Corporation owners need to pay particular attention to Box 14 entries for health insurance and HSA’s.

Form W-2 Box 12:

Employer paid health insurance premiums for employees (code DD)

Employer paid contributions to HSA accounts for employees (code W)

Employee contributions to a 401(k) plan (code D)

Employee contributions to a 403(b) plan (code E)

Form W-2 Box 14

Box 14 is where S Corporation owners report their health insurance and HSA payments.  A separate line item for each.  There is a difference in how they are treated, as follows:

If the company has a group plan, health insurance premiums and HSA payments are added to Box 1 of the W-2.  And, only Box 1.  There is no net tax effect.  They get added to your wages but deducted on your tax return.

If the company does not have a group plan, or you are reimbursed by the company, health insurance premiums and HSA payments get added to Box 1, 3 and 5.  You end up paying social security and medicare tax, but get to deduct them on your tax return.  FYI – the same treatment is required for employees who get reimbursed by the company for health insurance and HSA’s.

Be sure to provide this information to your payroll provider, so W-2s can be accurately prepared.

We hope you have a prosperous and healthy New Year!

DANIEL R. DEHOEK, CPA | ABV | CFP®

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