BillM223
Expert Alumni

Deductions & credits

@jamesjaek

 

 

As Susan alluded to above, the code W amount is "pre-tax.". That is, the code W amount is removed from Wages in boxes 1, 3, and 5 on your W-2 before it is printed. As she points out, this amount does not appear as a deduction anywhere because it was never in your income in the first place.

 

The HSA deduction on line 12 of Schedule 1 (1040) is ONLY for any "personal" contributions you made to the HSA, that is, contributions that you made directly to the HSA and not through your employer. This does not include any part of the code W amount.

 

The problem that you are describing is because the IRS, by default, considers the code W amount to be taxable until you enter your HDHP coverage.

 

Since you normally enter your W-2 long before you do the HSA interview where you enter your HDHP coverage, there is a period of time in which the code W amount appears in Other Income, conforming with the IRS rules.

 

We always encourage taxpayers to not watch the Refund Meter too closely, because there are things happening in the background asynchronously to what you are doing.

 

Please go to the HSA interview (Search (upper right) for hsa and click on the jump-to result), and go through the entire interview. When you enter what type of HDHP coverage you had in 2019, then the code W amount will be removed from Other Income, and all will be well.

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