Question

Section 125 Cafeteria Plan Code W

Forum|Forum|3 years ago
February 21, 2023
2 replies
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My employee has my contributions to a Section 125 Cafeteria plan shown in Box 12 with Code W on my W2. When I enter my contributions this way, I am asked a number of questions regarding having an HSA. Since my employer does not offer an HSA and my insurance plan is not a HDP, my contributions calculate as taxable plus a penalty. I presented this to our payroll provider and they said that Code W is for reporting the FSA 125 contribution and not an HSA. Is this correct and how do I avoid paying taxes and the penalty?

O

Opus 17

Employee

What type of plan is it? (There are a lot of plans that fall into section 125.) If you mean a health care flexible spending account, that is not reported anywhere on your W-2. Box 12 code W is only for HSAs, not FSAs. You need a corrected W-2. If you file without a corrected W-2 and just remove the code W entry, you can expect an IRS letter and tax assessment.

https://www.irs.gov/instructions/iw2w3

If you mean a dependent care flexible spending account, that would be reported in box 10, not box 12.

J

Jeanne3530Author

It is a Health care flexible spending account. The payroll provider is resistant to changing my W2.

M

Mike9241

we can't do anything but you can try to contact the iRS on this matter. try to speak to someone higher up in the company. not only do you have this issue but every other employee that has this on their w-2. it's plain wrong. if they don't correct the w-2s every affected employee will be getting an IRS notice. then when they respond to the IRS to explain - maybe even meet in person with the agent...................................

B

BillM223

Get a corrected W-2.

"that Code W is for reporting the FSA 125 contribution"

This is wrong. Have them read the W-2 instructions on page 20:

"Code W—Employer contributions to a health savings account (HSA). Show any employer contributions (including amounts the employee elected to contribute using a section 125 (cafeteria) plan) to an HSA."

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