Discussion:How does an Employer treat an overpayment in an FSA?
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Discussion Forum Index --> Advanced Tax Questions --> How does an Employer treat an overpayment in an FSA?
Discussion Forum Index --> Tax Questions --> How does an Employer treat an overpayment in an FSA?
Twobrewers (talk|edits) said: | 12 November 2008 |
| This is an usual problem.
The administrative side of a FSA had a glitch. For the sake of discussion, we will say that every employee has a $500 FSA. Well, somehow, the administrator of the FSA ended up sending out checks to every employee for the reimbursements and an additional $500. So the administrator paid every employee $500 above and beyond what they should have - or were allowed. (The administrative company is related to the employer) The employer knows it can't really ask all of the employees to send back $500 because many have already spend the money. (Free check in the mail!) So the employer has to figure out how to report the additional distribution from the FSA... Does this overpayment belong on a W-2 or a 1099-Misc? | |
| 12 November 2008 | |
| I would 'gross up' for the correct FICA withholding, then add to the W-2 of all. It was paid in cash to employees, richt? | |
Twobrewers (talk|edits) said: | 12 November 2008 |
| Yes - it was paid in cash. | |
