Please sign in to post in this forum.

ForumsFinancing Tips

Up to All Forums

This Question is Not Answered

1 "correct" answer available (5 pts) 2 "helpful" answers available (4 pts)
Post a new topic
5 Replies Last post: Nov 6, 2008 11:36 PM by tkwkrw

HSA and payroll taxes question

Jan 13, 2009 7:54 AM

Click to view Bridge's profile Mogul Bridge 364 posts since
Jun 3, 2008
I own a LLC (S corp tax elections).

My business pays me wages and passes through income to my personal return.

My questions are:

1) Am I better off making HSA contributions to my "employee" (me) through my business as an expense or paying them personally?

2) If I pay through my business, do I need to report it on the W-2 (no box 1)

3) If I have to report it on the W-2, do I need to pay payroll taxes on this amount?

In short, can I avoid payroll taxes by either paying through my business or passing the income to my personal return and paying personally.

Thanks,
Greg
Tags: credit, business, llc, llc_credit, business_credit Report as inappropriate
Click to view dublincpa's profile Mogul dublincpa 165 posts since
Jan 29, 2008
1. Re: HSA and payroll taxes question Jan 13, 2009 10:02 AM
in response to: Bridge
How are contributions treated for owners and shareholders of S corps?
Owners and officers with greater than 2% share of a Subchapter S corporation cannot make pre-tax contributions to their HSAs through the company by salary reduction. In addition, any contributions made to their HSAs by the corporation are taxable as income. However, they can make their own personal contributions to their HSAs and take the "above-the-line" deduction on their personal income taxes.


http://www.treas.gov/offices/public-affairs/hsa/faq_employer-participation.shtml#hsa9

If the company pays, it will increase Box 1, but not 3 or 5 of W-2. => No payroll taxes. You will also have to report in Box 12 as Code W and file Form 8889 with your 1040.

The only way it would reduce payroll taxes is if you reduced your W-2 and counted the contribution toward meeting your reasonable compensation.

Report as inappropriate
Click to view Bridge's profile Mogul Bridge 364 posts since
Jun 3, 2008
2. Re: HSA and payroll taxes question Jan 13, 2009 1:49 PM
in response to: dublincpa
Thans for the answer.

Quck follow-up:

If the company pays, I report it in the W-2, code W, but I do NOT pay payroll taxes on it?
Report as inappropriate
Click to view dublincpa's profile Mogul dublincpa 165 posts since
Jan 29, 2008
3. Re: HSA and payroll taxes question Jan 13, 2009 2:00 PM
in response to: Bridge
No payroll taxes, but it does get included in Box 1 of W-2 as well as Box 12 Code W.
Report as inappropriate
Click to view Bridge's profile Mogul Bridge 364 posts since
Jun 3, 2008
4. Re: HSA and payroll taxes question Jan 13, 2009 2:21 PM
in response to: dublincpa

1) My company pays - no payroll taxes for either my company or me.
2) Report it on the W-2 (box 1, code W box 12).


Do I report it as an "expense" for my company (reduce pass through gain)?


Overall, this seems like a tax neutral event regardless of if my company pays or me as long as there is pass through income enough for me to pay personally?

Report as inappropriate

More Like This

Legend

  • Open Question
  • Answered Question
  • New content since your last visit
  • Updated content since your last visit
  • Content you have read