Deductions & credits

It depends on how your contributions were made.

Most taxpayers contribute to their HSA by means of salary/payroll deduction through their employer. In this case, the HSA contributions (both your employer's and yours) are (1) listed in box 12 with a code of W on your W-2, and (2) removed from Wages in boxes 1, 3, and 5 on your W-2. This is why these contributions are not listed on line 12 on Schedule 1 (1040) - because you can't deduct something that was never in your income in the first place.

This means that these contributions were made with pre-tax dollars.

Some taxpayers make contributions directly to their HSA, not through the employer. These contributions are shown on Line 12 on Schedule 1 (1040), because these contributions are made with after-tax dollars.

As noted above, the pre-tax contributions should appear on your W-2 in box 12 with a code of W. Your after-tax contributions are entered on "Let's enter your HSA contributions" (see screenshot below) on the second line.

***Note***

There are a small number of cases where the employer does not follow the IRS directions to place the payroll deduction in box 12 with a code of W, but uses box 14 instead. In this case, the taxpayer has to ask the employer if the contribution was pre-tax or after-tax, because how it gets entered in TurboTax varies. If this is your situation, please comment below.

 

[Edited 3/31/2020 3:41 pm CDT - updated for 2019]

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