spiritriderParticipantStatus: Small Business OwnerPosts: 1903Joined: 02/01/2016
From the Gusto link Q&A they correctly list HSA contributions as having to be reported taxed as wages. However, in setup instruction 7 they only say; “Next to Benefit Type, select Medical, Dental, or Vision.” No mention of HSAs. So it remains to be seen if they actually have a separate designation for HSAs in the software.
The usual work around if the software does not support HSA contributions is to add the HSA contributions to the medical, dental and vision premiums. This ensures the proper payroll FICA wage deduction, tax payments and calculation of all health insurance premiums and HSA contributions. This will cause the combined amount to be reported in Box 14.
As DavidGlennCPA stated; This should really be reported as two separate line items in Box 14. If you want this to be correct, you will let the payroll software calculate the W-2, but not file it. You will then want to break out the two amounts and manually file the correct W-2.
I don’t know if Gusto does this correctly and just left HSA contributions of of the setup instructions, but I wouldn’t be surprised if they still don’t do this correctly 15 years after the advent of HSAs and 14 years after IRS Notice 2005-8.
It would be interesting to hear what David says Gusto’s response is.DavidGlennCPAParticipantStatus: AccountantPosts: 57Joined: 06/12/2019
I can confirm they do have a separate designation for HSAs on the list they refer to.
I sent a message to Gusto and will update the thread when I get a reply.
David Glenn, CPA | Glenn Advisory
https://www.taxcpafordoctors.com | (808) 321-5664August 29, 2019 at 1:55 pm MST #242515White.Beard.DocParticipantStatus: PhysicianPosts: 936Joined: 02/06/2016
It is way cheaper to use a specialized payroll service than the CPA. When we had limited numbers of employees, the cost for the payroll service was quite reasonable. The only thing the CPA did was double check the quarterly payroll reports.danesgodParticipantStatus: SpousePosts: 76Joined: 09/12/2017
I coordinated payroll for a friend’s small business for a while because they needed someone to deal with all the business things the founders weren’t interested in. It was a low key sweet side gig for a while.
When I took over, they were using Paychex and within a few weeks I found out several of the employees had been getting double paychecks for months. It amounted to something like $50k that employees had been paid (and strangely, no one mentioned it)… lawyers got involved. We used ADP after that.
None of this seems hard, but its also fairly cheap as others have mentioned. Then again I didn’t, and still don’t, have much faith in either of these companies to be good/thorough at their jobs.August 29, 2019 at 4:36 pm MST #242548DavidGlennCPAParticipantStatus: AccountantPosts: 57Joined: 06/12/2019
In case anyone is still interested, I heard back from Gusto –
My question –
For a 2% shareholder with HSA and Health Insurance benefits paid by the company, can you confirm which W-2 boxes these amounts will be reported?
My understanding is that for 2% shareholders the HSA and Health insurance paid by the company should be in Box 1 but not 3 or 5. It should also be included as separate line items in Box 14. One line for HSA and another for health insurance.
For non 2% shareholders the company paid HSA contributions go in Box 12.
Does Gusto handle the W-2 reporting for 2% shareholders as I describe?
Their answer –
Yes! As long as the employee’s status is correctly listed as a 2% shareholder in the employee’s people page, Gusto record the benefits as described in your email. This status is usually chosen by the administrator when the employee is being onboarded.
David Glenn, CPA | Glenn Advisory
https://www.taxcpafordoctors.com | (808) 321-5664jacoavluModeratorStatus: Physician, Small Business OwnerPosts: 2374Joined: 03/01/2018
that’s good to hear, and better than the non answer I’d got to the same query so far, though my point of contact has been a salesman. He went to the “tax res” team and so far didn’t have a confident answer, in contrast to the reply above.
I think we’re going to transition to Gusto and I’ll followup back here and let folks know how it goes
The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA