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Get your taxes done using TurboTax
I agree that how HSAs are done in the Tax Code can be quite confusing. Even worse, the best benefit of HSA contributions made through your employer also makes it impossible for you to see it.
That is, when you make a 401(k) contribution (code D in box 12), that amount is removed from Wages in box 1, but not from box 3 and 5, so it's easy to see how the 401(k) contribution is a tax benefit.
But the HSA contributions made through the employer - whether theirs or yours - are removed from Wages in all three boxes - so you actually can't tell from looking at the W-2 that any deduction was made at all. But you have now saved an additional 7.65% because you not only didn't pay federal income tax on the HSA contributions, but also no Social Security or Medicare taxes.
And since there is an actual line for HSA deductions - but only for contributions not made through the employer - it is very easy not to realize what's happening.
TurboTax is a DIY product, so there is a limit to how much explaining of the vagaries of the Tax Code can be done, especially, as you saw, the difficulty in getting taxpayers to understand that the IRS uses "employer contribution" to describe both contributions from the employer and from you by means of payroll deduction - and we have to follow that terminology.
I am glad that you've got it now.
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