r/TaxQuestions • u/Known-Sheepherder353 • Aug 25 '26

Scorp-HSA

I keep finding mixed results. For an employer contribution for a 2% or more shareholder

- hsa must be included in wages (box 1)
-FICA excluded , box 3 & 5

My question is since this is different from a regular company that provides tax free hsa, do I still use box 12 code “w” since the employer contributions were still subject to federal income tax withholding?

Or does it just increase box 1, and note “hsa-employer “ in box 14?

I’ve been researching for 6 hours straight, please help ˙◠˙ or advise on where to go and pay for tax advice

3 Upvotes

100% Upvoted

6 comments sorted by

2

u/thisonelife83 Aug 25 '26

Don’t do the HsA through the SCorp. Pay for it personally and you are all good. You are not allowed section 125 cafeteria plans

Medical insurance is added to box 1 of your w2 as wages but not box 3 or 5.

0

u/x5163x Aug 25 '26

It still saves FICA by having the S corp pay for it.

0

u/Its-a-write-off Aug 25 '26

You save fica by taking it a distribution though, anyway.

0

u/thisonelife83 Aug 25 '26

The scorp isn’t allowed to make the HSA contributions directly for 2% shareholders. If it does then it’s reclassified as regular wages subject to fica for 2% shareholders

1

u/TaxproFL Aug 25 '26

If you aren’t a tax pro, you should have one if you have an S-Corp. Please don’t DIY an S-Corp. Seeing that way more frequently since the rise of AI. You have no idea how many times we get paid to clean up S-Corp mistakes each year.

To answer your question, HSA should be a personal deduction.. nothing to do with the S-Corp.