Fact Check: Are fsa contributions reported on w2?

Are FSA Contributions Reported on W-2?

The claim in question is whether contributions to Flexible Spending Accounts (FSAs) are reported on an employee's W-2 form. This topic is relevant for employees who utilize FSAs for medical or dependent care expenses, as it pertains to how these contributions affect taxable income and tax reporting.

What We Know

1. FSA Contributions and Tax Reporting: According to IRS guidelines, salary-reduction contributions made by employees to a healthcare FSA are not included in the taxable wages reported on Form W-2. This means that these contributions do not appear on the W-2 as taxable income 89.

2. Employer Contributions: If an employer makes contributions to an FSA, these amounts may be reported on the W-2. Specifically, for employers who file more than 250 W-2s, the total of employer-funded health FSA contributions must be included in the aggregate reportable cost on the W-2 7.

3. W-2 Reporting Requirements: The IRS requires that the value of health care coverage provided by employers be reported in Box 12 of the W-2 using Code DD. However, this primarily pertains to health insurance coverage and does not specifically address FSA contributions 2.

4. FSA Reporting on Tax Returns: Employees are advised to check their W-2 forms when preparing their tax returns to ensure compliance with IRS regulations regarding FSA contributions. However, the reporting of employee salary-reduction contributions is not required on the W-2 510.

5. IRS Publications: IRS Publication 969 indicates that employer contributions to Health Savings Accounts (HSAs) are reported on the W-2, but it does not clarify the treatment of FSA contributions in the same manner 1.

Analysis

The claim that FSA contributions are reported on W-2 forms is nuanced and depends on the nature of the contributions. Employee salary-reduction contributions to FSAs are not reported on the W-2, which is a critical detail for employees to understand when filing taxes. This information is supported by multiple sources, including IRS guidelines and tax preparation resources 89.

However, the reporting of employer contributions introduces complexity. Only employer-funded contributions are reported on the W-2, and only for larger employers who meet specific filing thresholds 7. This distinction is crucial because it means that not all FSA contributions will appear on the W-2, which could lead to confusion among employees.

The reliability of the sources used in this analysis varies. The IRS publications 123 are authoritative and provide official guidance, while other sources such as TaxAct and accounting insights provide practical advice based on IRS rules but may not have the same level of authority. Additionally, some sources may have a bias towards simplifying tax preparation processes, which could lead to oversimplified interpretations of the rules 58.

The methodology behind the reporting requirements is grounded in IRS regulations, which are subject to change and interpretation. Thus, employees should remain informed about current tax laws and consult with tax professionals if they have specific questions regarding their individual situations.

Conclusion

Verdict: Mostly False

The claim that FSA contributions are reported on W-2 forms is mostly false due to the nuanced nature of the reporting requirements. Employee salary-reduction contributions to FSAs are not included on the W-2, which is a significant point that clarifies the misunderstanding. However, employer contributions may be reported under specific circumstances, particularly for larger employers, adding a layer of complexity to the claim.

It is important to note that while the IRS provides guidelines on this matter, the interpretation and application of these rules can vary, leading to potential confusion among employees. The available evidence primarily comes from IRS publications and tax resources, which are generally reliable but may not cover every scenario comprehensively.

Readers are encouraged to critically evaluate information regarding tax reporting and FSA contributions, as individual circumstances may vary. Consulting with tax professionals can provide tailored guidance based on personal situations.

Sources

1. IRS Publication 969 (2024), Health Savings Accounts and Other Tax-Favored ... IRS
2. Form W-2 reporting of employer-sponsored health coverage IRS
3. 2025 General Instructions for Forms W-2 and W-3 IRS
4. FSA Frequently Asked Questions - Human Resources Penn State HR
5. How to Report FSA on Your Tax Return - Accounting Insights Accounting Insights
6. How Do I Report Income from Employee FSAs on a W2 Form? 1099-etc
7. Employer Funded Health FSA W2 Reporting Guidance - Core Documents Core Documents
8. TaxAct: How do I report a Flexible Spending Account (FSA) from my W-2 ... TaxAct
9. TaxAct: How do I report a Flexible Spending Account (FSA) ... TaxAct
10. Where do I enter my FSA tax contribution? Does it go under ... - Intuit Intuit