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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29796
Experience:  Taxes, Immigration, Labor Relations
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I have a client who is a more then 2% shareholder in her S

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I have a client who is a more then 2% shareholder in her S corporation. She and he husband have an HSA in which she has contributed and the company has matched. Is there reporting such that she will add the amount of the HSA to Wages on the 941, 940 and the State unemployement return, but not subject to Fed with, ss medicare....then under wages on the W-2...Box 12 W for the employee portion and box 14 for the employer portion. They do have a 125 plan, but since the are more then 2% shareholders they are not entitled to the pretax amounts...correct? Thanks


Hi and welcome to Just Answer!
According to IRS publication 15B -

Partners and 2% shareholders of an S corporation are not eligible for salary reduction (pre-tax) contributions to an HSA. Employer contributions to the HSA of a bona fide partner or 2% shareholder are treated as distributions or guaranteed payments as determined by the facts and circumstances.
Any HSA contributions for 2% shareholders of an S corporation are treated as their after tax contributions. Contributions made by the S corporation (employee) are either included into wages (W2 form box 1) or reported on K-1 based on specific circumstances.


I told the client to book it in box 1 of the W-2 and in just wages on the 941...similar to health insurance for s corp shareholder right???


Yes - very similar. No deductions are allowed for HSA contributions - you may provide pub 15B to your client to support that position.


Perfect wonderful as always...Happy New Year!

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