BillM223
Expert Alumni

State tax filing

The answer is not simple.

 

If the wages were earned in New Jersey or from New jersey sources, then the HSA contributions withheld from the wage income (i.e., code W in box 12 of the W-2) would have to be added back to New Jersey state income. 

 

So the question becomes "what is the reason that you are filing a non-resident New Jersey return?"

 

TurboTax does make it possible in a non-obvious way to address the HSA contribution issue, if you feel that the HSA contributions should not be taxable in NJ in your case..

 

First, the code W amount is automatically added to New Jersey state income, as you already know.

 

Then, on the screen entitled "Other Wage Adjustments - W-2", make an entry of something like "HSA addback" and a negative dollar amount of the code W amount. This will subtract the code W amount from New Jersey state income, on the condition that you think it does not apply.

 

The next screen will be "Other Wage Income Allocation" where you will be asked how much of the income item belongs to New Jersey. Enter zero, although it does not seem to matter what you enter.

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"