Box 12 Code W

[bmshah1]

My W2 has an amount in box 12 with code W for HSA contributions. The amount includes both my and my employer contributions for 2023. The amount is increasing my total income for 2023. I walked through the HSA section in TT but after covering the entire section my total income is not going lower. If I don't add line item 12 from my W2 then my total income goes down bringing down my tax bill. Can someone help explain why 12 W is counted towards my income raising my taxes and how I can avoid that?

[dmertz]

The entry of the code-W amount in box 12 of TurboTax's W-2 form will raise your income if any part of it is being treated as an excess contribution due to your entries into TurboTax.  Make sure that you have not also entered any of this amount as a personal HSA contribution.  Doing so would be double counting the contribution.

[bmshah1]

@dmertz Including my employer contribution I contributed the maximum amount allowed for 2023. I didn't contribute any other personal amount. I also went through TT to make sure this amount is not counted as my personal HSA contribution. Somehow TT is still showing me higher taxes. Any other ideas?

[dmertz]

Are you married and your spouse also contributed to an HSA?  If so, do you file jointly?

Look at the Form 8889 itself and see how much is on line 11 compared to the amount on line 13.

[bmshah1]

@dmertz I'm married filing jointly. My spouse didn't contribute to the HSA. Thanks for the tip to look at form 8889. I reviewed it. It looks correct. 

[Critter-3 · Accepted solution]

The HSA is handled in 3 parts in the TT program :

https://ttlc.intuit.com/community/health-care/help/what-is-a-health-savings-account-hsa/00/25765

First the contribution:

https://ttlc.intuit.com/community/entering-importing/help/where-do-i-enter-my-hsa-contribution/00/26...

https://turbotax.intuit.com/tax-tips/health-care/what-is-the-irs-form-8889/L8hRNHx4o

Next the limitations screen to confirm you are eligible to make the contributions:

Until you complete the HSA portion of the TurboTax interview to establish your eligibility for an HSA contribution, TurboTax will treat the amount entered on the W-2 form as an excess HSA contribution.

https://ttlc.intuit.com/community/health-care/help/why-am-i-showing-an-excess-hsa-contribution/00/26...

And lastly any distribution:

https://ttlc.intuit.com/community/health-care/help/why-is-my-hsa-distribution-taxable/00/26609

[dmertz · Accepted solution]

If on Form 8889 line 11 is more than line 8 or line 2 is more than line 13, you have told TurboTax that you have made an excess HSA contribution.

Also, examine Form 1040 with and without the Code W amount being entered and identify which lines of Form 1040 are changing.

[MarkH64]

Similar question but I didn't see an answer.  Married Filing Jointly...I maxed out my HSA contribution at $8750 through payroll deductions but my company didn't contribute any of this amount (it was 100% my money).   Box 12 Code W on my W-2 has $8750 and when this amount is entered in the wages section, this amount is automatically populated in 8889 Part 1, Line 9 "Employer Contributions made to your HSA".  When this automatically populates in 8889 this negates my entire HSA deduction.  Again, the amount is coded W but it was 100% my contribution through payroll deduction.  To correct this, the only way I found was to delete the Box 12 Code W in the wages section of TT and when you get to the HSA section, select the option of  personal contribution of $8750.  If there's another option in TT to input Box 12 Code W in the wages section and not have it count against me on the 8889 as an employer contribution, I'd love to know it. 

[dmertz]

Any contribution made through your employer is deemed to be an employer contribution, not a personal contribution.  Do not enter the code-W amount as a personal contribution.  You do not get a deduction for the code-W amount because your employer has already excluded this amount from the amount in box 1 of your W-2.

[MarkH64]

I think I just answered my own question...Because your payroll deductions were taken pretax, they are considered 'employer contributions' and are to be entered on Line 9 of form 8889. 

[RyanK]

I am in the exact same boat here. I have gone through all the HSA section of TT and answered that I have a qualified family HSA. Yet, when i delete Box 12 code W amount, my taxes go down. I do not understand how these pre-tax dollars are shifting my taxes around. And can we all agree that "employer contributions" is a needlessly inaccurate description of this code? 

[KrisD15]

To clarify, besides the HSA contributions listed in Box 12 on your W-2, did you also answer the questions concerning your High Deductible Health Plan  (HDHP)?  (In addition to the Health Savings Plan (HSA))  

[RyanK]

Thanks for responding. I think your question must be on the right trick. I went through the HDHP stuff too, that's the family plan part, but now I've clicked all over and back and forth and been to the forms and such too. Now, no matter what I do, the box 12 code 2 does NOT change my taxes anymore. So i am guessing, at some point, I had not completed the the HDHP part.  I started a new file to test and upon completing the HDHP questions, the taxes do go down. I believe had some confusion around the poor terminology of "Employer Contributions" and also in the HSA area where is specifically asks "Did you put money into an HSA?" and then says "THIS INCLUDES EVERYTHING YOUR EMPLOYER CONTRIBUTED TOO". It further go on to refer to "Any contributions you "personally made" (not through your employer).  All quite confusing when combined with "employer contributions" code on the W2.
All this seems completely backwards to me for the software. The taxes should not change upon entry of the W-2. The taxes should be added if you answer the HDHP questions in a way that would cause your Box12 Code W contributions to not be tax free.