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In the Payroll Mailbag …

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in Office Management,Payroll Management

How should we handle it when health benefit deductions go bad?

Question: We made a mistake with employees’ pretax health benefit deductions, but we didn’t notice it until this year. Can we deduct for these benefits this year? How should this be reported to the IRS?

Answer: Pretax deductions can’t be made in a subsequent year. If the deductions were properly reported on employees’ 2016 W-2s, there’s nothing to report on this year’s W-2s.

What do we do about a missing proof of identity?

Question: An employee failed to provide proof of his identity to our third-party health savings account administrator. The administrator refunded his pretax contributions to him. How do we handle this for tax purposes? What if the employee receives his refund during the next calendar year?

Answer: The refund must be included in the employee’s income during the year he received it. If he receives his refund in January, however, he has until ...(register to read more)

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