"you can see previously posted from someone that when we put HSA $ into line 12 of form 8889"
When I look, you are the only person who posted something about line 12 (1/5/22 and 1/3/22), so please point out the person and the date so I can find it.
Line 12, however, is not that interesting. What it represents is the maximum amount the line 13 value (your deductible direct HSA contributions) can be. It does this generally by calculating what your annual HSA contribution limit is, and subtracting any direct contributions that you reported, any "employer" contributions (i.e., contributions from your employer and from you by means of payroll deduction), and any qualified HSA funding distributions (from an IRA).
Your deductible HSA contribution (line 13 of Schedule 1 (1040)) is the lesser of line 13 (the calculated max) and line 2 (what you actually contributed directly to the HSA).
Because line 12 is calculated by TurboTax, I don't know what you mean by "when we put HSA $ into line 12".
"it still reduced my return to a negative number."
A common way that this could happen:
When you enter your W-2, the moment you enter the entry for code W in box 12, your refund drops or your tax increases. Why? Because the IRS does not recognize the deductibility of HSA contributions until you have shown that you had valid HDHP coverage. Since you don't do this until the HSA interview, from the time that you enter the W-2 to the time you answer the HDHP coverage questions in the HSA interview, your refund will be artificially small or your tax artificially high. Once you enter your HDHP coverage, TurboTax will correct things and your refund or tax due will be set right.
NOTE: this is why we encourage taxpayers not to follow the Refund Meter too closely, because things are happening in the background that you don't understand, but it all works out in the end.
If you meant something else, I would need to have some more information about your HSA, like your HDHP plan, number of months, code W value on your W-2 (if any), all direct contributions to your HSA and so on.
Please be assured that properly entered, HSA contribution are "deductible" even if the way they are deductible is not obvious. ***Note, the proper term for the code W amount is that it is "excluded" from income. Exclusions don't show up as deductions on your return even the effect on your tax due or refund is the same.
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