HSA amount contributed by employer missing on W-2

Employers are supposed to report employer contributions to the HSA (and any employee contributions made through payroll deduction) on the Form W-2 in Box 12 with a code of “W”. That amount should not be included in Box 1 on the W-2, meaning that you don’t pay any tax on that amount. The contribution is automatically deducted from your income tax that way without appearing as a deduction on your tax return.

Even though the amounts won’t affect your tax calculation, you still need to report the contribution on Form 8889. In Part 1 of the form, you will enter the total of the contributions you personally sent directly to the HSA ($0, in your case), figure out your contribution maximum limit, enter the amount that the employer sent in ($3500 for you), and then calculate the amount of your HSA deduction. In your case, the HSA deduction will be $0, because it was already deducted automatically on your W-2.

However, since your employer did not properly report the contributions in Box 12, it makes me wonder if your Box 1 amount is correct. I recommend that you talk to your employer and confirm that the amount in Box 1 is correct and does not include the amount that they contributed to your HSA. If it is correct, then just confirm the amount that was contributed to your HSA and file your taxes as normal, including Form 8889. If Box 1 is not correct, however, you’ll need to get them to give you a corrected W-2.