HSA Contributions on W2: What It Means for Your Taxes
Decode the HSA information on your W-2. Learn how payroll and direct contributions affect your tax return and how to report them accurately.
A Health Savings Account (HSA) is a tax-advantaged savings account for healthcare expenses, available to those with a high-deductible health plan. Your annual Form W-2 from your employer summarizes your earnings and tax withholding. Understanding how HSA contributions are reflected on this form is part of managing your taxes correctly.
Locating and Understanding HSA Contributions on Your W-2
On your Form W-2, you will find your total HSA contributions for the year in Box 12, identified by the code “W”. This amount represents all contributions made to your HSA through your employer’s payroll system. The figure includes contributions made by your employer and any pre-tax amounts you elected to contribute from your salary.
The amount reported with Code W has already been excluded from your taxable income. This means the figures in Box 1 (Wages, tips, other compensation), Box 3 (Social Security wages), and Box 5 (Medicare wages and tips) are lower because of these contributions.
Contributions Not Reported on the W-2
You should distinguish between contributions made through payroll and those made directly to your HSA provider, as direct contributions will not appear on your Form W-2. These are after-tax contributions and can be made by personal check or an electronic funds transfer from your bank account.
Since these funds have not passed through payroll, they are not subject to pre-tax treatment and are not included in the Box 12, Code W amount. While contributions on your W-2 have already lowered your taxable income, you must account for these direct contributions separately to claim a deduction.
Tax Filing and Reconciliation with Form 8889
When you file your federal income tax return, you must use Form 8889, Health Savings Accounts (HSAs), to report all contributions and calculate your HSA deduction. The amount listed in Box 12 with Code W on your W-2 is entered on Line 9 of Form 8889. Direct, after-tax contributions made outside of your employer are entered on Line 2 of Form 8889. Reporting these amounts allows you to claim a deduction, which will lower your overall taxable income on your Form 1040.
To complete Form 8889 accurately, you must know the annual contribution limits set by the IRS. For 2025, the limit for self-only coverage is $4,300, and for family coverage, it is $8,550. Individuals age 55 and older are permitted to contribute an additional $1,000 as a catch-up contribution.
Handling Excess Contributions
An excess contribution occurs when the total amount deposited into your HSA from all sources exceeds the annual IRS limit. If you discover your total contributions are over the limit, you must take corrective action. Failure to do so results in a 6% excise tax on the excess amount for each year it remains in the account, which is reported on IRS Form 5329.
To avoid this penalty, you must withdraw the excess contribution and any earnings it generated before the tax filing deadline, including extensions. You should contact your HSA administrator to request a “return of excess contribution.” The earnings attributable to the excess contribution must also be withdrawn and will be considered taxable income for the year the contribution was made. Your HSA custodian can help calculate the amount of earnings you need to withdraw.