HSA Employer contribution to be taxed in US payroll

[Former Member]

Hi Experts,

Our client has a requirement where the Health Savings Account (HSA) employer contribution should increase the employee tax base for
withholding and unemployment taxes for the state of California. This wage type is employer contribution and is not paid to employee. i.e this will not affect the net pay of the employee directly. But the tax base on which withholding and unemployment taxes are calculated should be increased by the amount of employer HSA contribution. In other words though this amount is not paid to employee, employee is liable to pay tax on this benefit. Please suggest how this can be achieved.

Regards,

Poorvi.

[Former Member]

Hi Shyla,

This might be of some help to you, please try -

Check processing class 71 for HSA EE Contribution Wage Type - I have made it as I (403B)

Created an entry in T5UTY as 95 with Taxability as N

Assigned 95 to CA Tax Model against Residance with I in table T5UTE

Then processed payroll and observed HSA EE Contribution added to State Withholding Tax

Regards,

SS

[Former Member]

Hi,

A small correction - HSA Plan EE Contribution Wage Type process class 71 has to be C

Then creation entry in T5UTY remains same as above message

Assign 95 to CA tax model against R & U with C in table T5UTM (not 5TUTE)

With this state withholding, UI, SDI will calculate tax on HSA EE Contribution amount

Could some one help me out how to make HSA ER contribution amount taxable for employee residing in CA.  Not very sure what is to be maintained in processing class 69 & 71 for HSA ER Contribution wage type

Regards

SS

[Former Member]

Hi SS,

Thank you, I created custom specification and assigned it in CA tax model and it worked.

Appreciate your response.

Regards

Shyla

[former_member85620]

Hi SS,

I am a little confused about how everyone has handled the ER contribution just for CA, was an additional wage type created for this state? The plan only allows for one ER wage type to be entered on the plan so how was this done without impacting employees in states where this requirement does not apply?

[Former Member]

I have got this configuration working in system.

[Former Member]

Hi Poorvi,

I am dealing with the same issue - HSA ER Contribution paid on PA0015 should be taxable for state of California but not Federal. How did you accomplish that?

Regards,

Lana.

[Former Member]

Please check the processing class 71 for this WT....

[Former Member]

Hi Svetlana,

You can do this by using processing class 71, processing class 69 and then tables T5UTM, T5UTE and T5UTY.

Regards,

Poorvi.

[Former Member]

Hi Poorvi,

Please can you provide me the steps as we have to tax the california employee while the rest are pre-tax.

Thanks

Shyla