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I am an employer and my company offers HSA plans to our California

Customer Question
employees. we make contributions to...
I am an employer and my company offers HSA plans to our California employees. we make contributions to the HSA accounts. I understand that these are taxed under CA tax law...how do i account for these taxes in payroll?
Submitted: 7 years ago.Category: Tax
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Answered in 17 minutes by:
10/1/2010
Tax Professional: RD, Certified Public Accountant (CPA) replied 7 years ago
RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8,784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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RD :

Do you run your own payroll? or have a payroll service providing the services?

Customer : Have payroll service
RD :

Employer contributions to employee HSAs are a business expense and are tax deductible to the employer for federal tax purposes.

RD :

Also employer contributions to employee HSAs are exempt from Social Security taxes, Medicare taxes and
Federal Unemployment Insurance taxes.

Customer : Do u have some guidance?
Customer : The question is in California the contributions are taxable on state taxes to the employee. How do I show the taxable portion? By pay period or wait and put on w2
RD :

The taxable portion (contribution by employer to HSA account) will be reported on Form W-2 (Box 12 with code W). This will be added to the adjusted gross income by the employee when filing the CA State tax return.

RD :

Here is a link to the CA income tax instructions-

RD :

http://www.ftb.ca.gov/forms/2009/09_540cains.pdf


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