How Do I Report Income from Employee FSAs on a W2 Form?

Businesses may report income from employee flexible spending accounts (FSAs) in a few ways, or not at all, on a W2 form. The Internal Revenue Service does not require employers to report health flexible spending accounts on an employee’s W2 form. There is an exception to the rule. Report income from a health FSA if the amount elected for a health FSA is greater than your employee’s deductions for all benefits. Employers must also report dependent care FSAs. Enter that information in Box 10, labeled “Dependent Care Benefits.”

Do not report employee salary reductions that an employee contributes to an account. The IRS does not consider that income as part of an employee’s taxable wages. Only include the amount in Box 14 “Other” on a Form W2 for informational purposes.

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