HSA contribution for >2% shareholder S corporation

[mircpa]

Hello

I have this question regarding HSA contribution by greater than 2% shareholder. I know these are reported under line 1 of W2 and box 12 code W for HSA contributions & code DD for health insurance premiums. Since HSA contribution code W amount is flowing thru to form 8889 and software is regarding as employer contributions and disallowing HSA contribution deduction. I searched online but this looks remain unanswered. Does anyone has idea how to get around and have software take deduction. I am posting from IRS notice 2005-8.

For employment tax purposes, when contributions are made by an S corporation to an
HSA of a 2-percent shareholder-employee, the 2-percent shareholder-employee is
treated as an employee subject to Federal Insurance Contributions Act (FICA) tax and
not as an individual subject to Self-Employment Contributions Act (SECA) tax. (See
Announcement 92-16, 1992-5 I.R.B. 53, clarifying the FICA (Social Security and
Medicare) tax treatment of accident and health premiums paid by an S corporation on
behalf of a 2-percent shareholder-employee.) However, if the requirements for the
exclusion under section 3121(a)(2)(B) are satisfied, the S corporation’s contributions to
an HSA of a 2-percent shareholder-employee are not wages subject to FICA tax, even
though the amounts must be included in wages for income tax withholding purposes on
the 2-percent shareholder-employee’s Form W-2, Wage and Tax Statement. The 2-
percent shareholder-employee, if an eligible individual as defined in section 223(c)(1), is
entitled under sections 223(a) and 62(a)(19) to deduct the amount of the contributions
made to the 2-percent shareholder-employee’s HSA during the taxable year as an
adjustment to gross income on his or her federal income tax return.

[Catherine]

Your information is correct, and the issue is definitely to make the software bend to your will.

Have you tried overrides on detail screens?  Those can work even when nothing else seems to cooperate.  I stopped using ATX after the 2012 debacle so cannot give ATX-specific advice other than overrides.

[PaulH]

Bump.  Just wondering if you found a way to make ATX bend to your will?  I am having the same problem.