Does My 940 Need to Show Grossed Up Wages of HSA and Health Premiums?

As you navigate your Health Savings Account (HSA), you may come across questions about tax forms like Form 940. One common query is whether Form 940 needs to show the grossed-up wages related to HSA and health premiums. Let's dive into this topic to provide clarity.

Form 940, also known as the Employer's Annual Federal Unemployment (FUTA) Tax Return, is used by employers to report their annual federal unemployment tax information. When it comes to HSA and health premiums, here's what you need to know:

• If you receive employer contributions to your HSA, these contributions are generally excluded from your gross income.
• Health insurance premiums paid by your employer are also typically excluded from your gross income.
• Employer contributions to your HSA and health premiums are not considered wages for federal income tax purposes, so they are not included in the wages reported on Form 940.

However, it's essential to distinguish between wages subject to federal income tax and wages subject to federal unemployment tax. The wages reported on Form 940 should generally align with taxable wages subject to federal unemployment tax.

Here are a few key points to keep in mind:

• Form 940 focuses on the calculation of the employer's FUTA tax liability based on the taxable wages paid to employees during the year.
• Non-taxable items such as employer contributions to HSAs and health premiums should not be included in the taxable wages reported on Form 940.
• Employers should ensure that the wages reported on Form 940 accurately reflect the taxable wages subject to FUTA tax.

So, to answer the original question, employer contributions to HSA and health premiums should not typically be included as grossed-up wages on Form 940. These amounts are generally treated separately from taxable wages for federal income tax purposes.

When considering whether Form 940 should reflect grossed-up wages related to HSA and health premiums, it is important to understand the nature of these contributions and their exclusion from gross income.