Can someone confirm if Turbotax online accurately categorizing the employer and employee contribution (both through payroll deduction and reported in W-2 box 12c?

[intuit-rwck9]

I am specifically asking about employee contributions to HSA through Payroll deduction.

[MindyB]

Yes, TurboTax accurately categorizes these contributions. While 12c is simply a line label, the actual IRS code for HSA contributions is W, whereas code C refers to taxable life insurance. 

On your W-2, Box 12 typically has four lines (12a, 12b, 12c, 12d), and if you see a "W" on line 12c, that amount represents the total of both your employer's contributions and your own pre-tax payroll deductions. TurboTax is designed to recognize code W and automatically treat it as a "tax-free" benefit that has already been excluded from your taxable wages in Box 1. 

To ensure everything is handled correctly, you must complete the specific HSA interview in the "Deductions & Credits" section to confirm you had a qualifying High Deductible Health Plan (HDHP), if you don't complete this step, the amount will be taxable income until you confirm your eligibility. 

Here is how to navigate to check your HSA entries:

1. Click on Federal Taxes,  Deduction & Credits
2. Choose HSA, MSA Contributions
3. Continue until you see a page titled "Let's enter (your name's) HSA contributions" which will show any deductions already computed from your W-2 in a box that is greyed out, and another box for contributions you personally made.  

[dmertz]

Contributions made through payroll deductions are categorized as employer contributions.  Enter amounts shown in box 12 of your W-2 only in box 12 of TurboTax's W-2 form, nowhere else in TurboTax.