Are employer contributions into employees’ health savings accounts taxed as earnings of the employees? Under what...

Are employer contributions into employees’ health savings accounts taxed as earnings of the employees? Under what conditions may employees be exempt from the withholding of federal income taxes during 2017? How do such employees indicate their no-tax-liability status?

Expert Solution

Solution:-

1. Are employer contributions into employees’ health savings accounts taxed as earnings of the employees:-

Generally, contributions made by an employer to the health savings account(HSA) of an eligible employee are excludable from an employee's income and are not subject to federal income tax, Social Security or Medicare taxes. In addition,employer contributions are deductible as a business expense to the company.

2. Under what conditions may employees be exempt from the withholding of federal income taxes during 2017:-

Employees who had no income tax liability in 2017 and do not expect to have any for 2018 qualify for exemption from withholding of federal income tax from their wages.

3. How do such employees indicate their no-tax-liability status:-

Employees who are exempt from the withholding of federal income taxes should complete and submit to their employer Form W-4 showing the exempt status.

ekkarill92 answered 2 years ago

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