Other income or loss on Personal income

Forum|Forum|5 years ago
March 13, 2021
2 replies
7 views

There is a profit of 2900 on this section that I do not recognize as income

TurboTax Business Windows

BillM223

Level 15

Is Personal Income referring to a screen in TurboTax (in the Step-by-Step process)? Numbers are sometimes shown here that reflect your input, not your actual tax data.

Instead, please look at your tax return and see if you can find this $2,900 (it will probably be on Schedule 1(1040) if it is an income item).

Tell us what line it is on and we can figure this out (and if there is any text to the left of the $2,900, tell us what that is, too).

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ThomasTT

Level 2

Just found out Turbotax treats Box 12 W on W-2 form as "other income or loss" as a part of taxable personal income. The Box 12 item W is HSA which consists of both employer and employee's contribution. The $7100 limit of the employee's contribution is pre-tax, and should not be treated as a taxable personal income.

Some one in Turbotax please take a look of this issue. Thanks.

BillM223

Level 15

There is no problem with the TurboTax software here.

What is happening is this:

The IRS does not consider HSA contributions to be nontaxable until the taxpayer demonstrates that he/she has the proper HDHP coverage on form 8889.
But the W-2 Instructions call for HSA contributions made through the employer to be removed from Wages in boxes 1, 3, and 5 on the W-2 before it is printed.
Thus, when the W-2 is entered into TurboTax, the code W amount that had been removed from Wages has to be added back temporarily, until the taxpayer can show HDHP coverage in the HSA interview.
Therefore, the code W amount will appear on line 8 (Other Income) of Schedule 1 (1040) after you enter the W-2, but will be removed from Other Income during the HSA when you show HDHP coverage.

This is a temporary situation that is caused by the way the IRS defines the W-2 and the HSA process. TurboTax is doing it correctly and has done so for years.

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