Your employer contributed $1,350 to your HSA. By default, the IRS considers this taxable income. So when you enter your W-2 with the code W in box 12, your income goes up and your refund goes down.
However, when you complete the HSA interview and show that you had qualifying HDHP coverage for the year, then the $1,350 that you entered in box 12 with a code of W is removed from your income and your refund should normally increase.
Note that if you had a 1099-SA that reported on distributions from your HSA (payments for qualified medical expenses), this, too, is considered income when it is first entered, but when you answer the question on the next screen that the 1099-SA amount was all for qualified medical expenses, then the 1099-SA amount will be removed from income and your refund will go back to where it was.
There is often a considerable time lag between the time you enter your W-2 and the time you complete the HSA interview. This is why we advise you not to watch the refund meter too closely as there are things going on in the background that you may not be aware of. Just make sure that you complete the HSA interview, and it will be OK.
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