W-2 Reporting Requirements for Reimbursement Accounts – What has to be Included?
It’s that time of year when employers and employees begin thinking about deadlines for W-2s and reporting information for taxes. Healthcare reform has brought about many changes to the reporting requirements for healthcare costs and you may be asking yourself what requirements, if any, exist for reimbursement accounts. The IRS has outlined specific rules regarding various accounts.
Health Flexible Spending Accounts (FSAs)
Generally health FSAs are not required to be reported on an employee’s W-2. The exception to this rule is when an employee’s deductions for all benefits are less than the amount elected for the health FSA.
An employer offering a plan with flex credits which employees may use towards benefits but may not take as taxable income may also want to review how these flex credits affect the benefit amount. This may determine whether or not the health FSA must be included when reporting the cost of healthcare on the W-2.
See IRS Notice 2012-9 for examples describing when W-2 reporting is required for Health FSAs (refer to Q & A 19) and for more information on health FSAs and W-2 reporting requirements.
Dependent Daycare Accounts
Dependent daycare accounts are required to be reported on an employee’s W-2. Amounts provided to the employee for the year are entered in Box 10. In addition to the amount being reported on the employee’s W-2, the employee is responsible for filing Form 2441 with their taxes. This form confirms the amount listed in Box 10 is non-taxable income.
Health Savings Accounts (HSAs)
Employers are required to report employer contributions on the W-2 in Box 12 using code W.
Specific questions regarding what information must be included on a W-2 should be directed to your tax advisor or accounting specialist.
BusinessPlans, Inc. – myCafeteriaPlan does not intend to provide legal or tax advice and information contained in this article should not be interpreted as such. Regulations governing pretax plans are often open to interpretation and should be reviewed with your legal or tax advisor before making any decisions regarding your plan.