What does Box 12 code "w" on my w2 mean? And why am I losing money on both my state and federal return when I enter in the amount paid?

Forum|Forum|7 years ago
June 1, 2019
3 replies
8 views

When I enter in just over $4,000 in box 12 code W, my federal return and state returns go down substantially (Federal decreases $1,570 and State decreases $204). Why do the refunds decrease?

Thanks for any help that you can provide.

TurboTax Deluxe Windows

BillM223

Level 15

The amount with code "W" in box 12 in your W-2 is the sum of the contributions your employer made and that you made through a payroll deduction scheme.

However, the IRS, by default, assumes that these contributions are taxable until you complete the form 8889.

In TurboTax Deluxe, you enter the data to complete form 8889 by going to Federal Taxes->Deductions & Credits->Medical->HSA, MSA Contributions and entering the interview

Be sure that you complete the interview. This is because the IRS, by default, also assumes that if you don't enter the amount of your qualified medical expenses (which is one of the last questions in the interview), that the amount you had distributed is all taxable.

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enicolls25

Level 2

I have the same issue, but the interview never asks me about qualified expenses. I'm still being docked for this.

molgotts

Level 2

I'm having the same issue. Does anyone know how to fix this? Also, is box W my contributions or my employers contributions, or mine and my employer's contributions together? My employer doesn't contribute anything to my HSA.

andrewF

Level 2

TurboTax is importing Box 12 code W directly into line 9 of 8889. Earlier comments in this thread say that Box 12 code W indicates *any* contributions to an HSA, including both employer and employee contributions. However, when this number is entered into line 9, it indicates that the full $7,000 in that box that was added to my HSA is comprised of employer contributions, when actually it was $1,500 from my employer and $5,500 from me. As a result, my $5,500 contribution is not being subtracted from my taxable income.

To confuse things further, my 2017 and 2018 W-2s only list the $1,500 employer contribution. If the comments here are correct that Box 12 code W should include both employer and employee contributions, then the 2019 W-2 is correct, but being misinterpreted by TurboTax, while the 2017-2018 W-2s were incorrect but resulting in the correct answer. If I manually edit my W-2 to reduce it from $7,000 to $1,500, I get the answer I expect. Help?

Anonymous

box 12 code w from IRS instructions

W—Employer contributions (including amounts the employee elected to contribute using a section 125 (cafeteria) plan) to your health savings account. Report on Form 8889, Health Savings Accounts (HSAs).

so did you put in $5,500 thru your company's 125 plan? if so your taxable wages have been reduced so in effect you got the deduction. questions - check with you employer

11Dahl11

Level 2

I did not find this comment to be correct. W2 Wage amount is not reduced for HSA.

ErnieS0

Level 15

@opies and @acemall You are correct. HSA contributions are not taxable but there are a few steps that need to be completed in TurboTax.

The IRS wording is confusing. Box 12W is "Employer contributions to Health Savings Account." This includes your contributions and your employer's contributions. If your employer did not contribute anything, Box 12 is the amount of your contributions made through your employer's payroll.

TurboTax will include the Box 12 W amount in income unless you complete the questions about having a high deductible health plan.

Type 1099-sa in Search in the upper right
Select Jump to 1099-sa
Click Edit on Your HSA summary
On Tell us about the health-related accounts you had in 2020 select Health Savings Account (HSA)
Answer all the questions. Make sure to tell TurboTax that you were covered by a High Deducible Health Plan (HDHP) in 2020.
When you are done, TurboTax should take you back to the HSA summary and your Box 12W contributions will not be included in income.

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icnewer

Level 4

Still confusion here: we all agreed HSA contribution should be tax free, however, all you tax experts said form 12c (code: W) item should be in the line 9 of form 8889, even though this is contribution by employee through payroll deductible (in fact TT will auto place it into line 9 after we auto-import W-2 form into TT), then on line 12, you will get a very small number as you will substract line 11 from line 8 (which is fixed 7100 as a family HDHP plan), for my case it's only $75. So even I copy this HSA contribution (for my case it's $7025) into line 2 of 8889, in line 13 I will only get $75 as a final HSA deduction. It actually means that only $75 out of total HSA contribution of $7025 is tax-free, which is NOT correct as we agreed HSA contribution should be tax-free...

Any idea to fix this? Help please. @ErnieS0 @MayaD @ThomasM125

BillM223

Level 15

"It actually means that only $75 out of total HSA contribution of $7025 is tax-free"

This statement is not true. When your W-2 was printed the code W amount in box 12 of the W-2 was removed from Wages in boxes 1,3, and 5 BEFORE the W-2 was printed. That is, your actual income was HIGHER than what was listed in boxes 1, 3, and 5.

But, as you see, your original (actual) income (Wages plus the box 12 amount) is not on your return, only your original income net of the box 12 amount. That is your tax benefit - your contribution as listed with code W in box 12 of your W-2 is never in your income - so this does not have to be listed in box 13 on the 8889.

P.S. box 13 will not have an entry in your case unless you also made direct contributions to your HSA. For taxpayers who make contributions to their HSA only through their employer, this box should be zero because box 2 is zero...

So did you duplicate your entries: once as part of box 12 and again as a direct contribution? You should not enter any part of the amount in box 12 with a code of W anywhere else in TurboTax, like on the screen that asks if you made direct contributions to the HSA...

@icnewer

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