BillM223
Expert Alumni

Deductions & credits

Any HSA deductions that were through your employer are a no-brainer - they follow the income they are applied against. In this case, they follow the W-2 Wages for each state.

 

Illinois and Pennsylvania both ask (in different ways), for how much income belongs to each state. When you enter that amount, the Wages numbers include the code W in box 12 amounts for the HSA deductions. So these HSA deductions are allocated correctly automatically.

 

Your concern is about the personal HSA contributions. If you do not do anything, then this amount shows up on the Illinois AND the Pennsylvania returns.

 

Unfortunately, TurboTax does not have any way to directly adjust these amounts.

 

What you should do is let Illinois have the entire amount for the personal HSA contribution (since you made it while you lived in IL), then make an adjustment for Pennsylvania to remove the effect of the personal HSA contribution on the PA-40.

 

You would do that by getting into the Pennsylvania interview, and proceeding to the screen that reads "Any Other Miscellaneous Compensation". Answer "YES".

 

The next screen reads "Miscellaneous Compensation". Here, if married, pick the person to whom the HSA belongs, enter "HSA adjustment" for Payer, and the amount of the personal contribution on the federal return.

 

On the next Miscellaneous Adjustment screen, enter the federal amount of the personal HSA, and the same thing for PA amount. Leave PA withholding blank.

 

The net effect of this is to add this amount to Pennsylvania income, so that this amount is subtracted on line 10 of the PA-40, it's as if there was no personal HSA deduction for PA, leaving it all allocated to IL, which, as it turns out, is as it should be.

 

Please write down what you did and why and put the note in your tax file in the very unlikely case that anyone ever asks.

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