How do I report HSA interest, dividends, and capital gains on the New Jersey Return?

[DianeW777 · Accepted solution]

Because New Jersey (NJ) does not allow the HSA contribution deduction you must add the earnings to your NJ return.

• Employer contributions to HSAs are included in NJ income and employee contributions are not deductible on the NJ individual tax return. But withdrawals from HSAs for medical purposes are deductible on the NJ tax return (subject to a 2% exclusion) as medical expenses.

Add the interest, dividends and capital gains on the NJ return by following the instructions below.

1. Sign into your TurboTax account/return > Select States tab > Continue or Edit your NJ return
2. Continue until you reach 'You've Finished Your New Jersey Return' > Select Update beside Adjustments
3. Continue to the page 'Other Non-Wage Income'
4. Enter your description and amounts
5. Continue to complete your NJ return
6. See the image below.

[yanivi]

I ended up putting HSA dividends into the "Dividend Income" page.  This way it was reported on line 17 "Dividends".

[deeMatrix]

How did you do this?  When entering the HSA dividend info on Line 17 Dividends of 1040 form in TurboTax it does not include the description I entered or the dividend amount on the Schedule B Part 2 Ordinary Dividends section.

[AmyC]

The  additional NJ income should not go on the federal. It should be entered into NJ as described above by @DianeW777 

@deeMatrix 

[deeMatrix]

Yes we are aware of this but trying to see how this individual was able to have the additional HSA dividend income be entered on the NJ tax form so it goes on Line 17 versus Line 26.