How can I edit my HSA employer contribution amount? It's locked because it's pulling from my W-2 Box 12 Code W. This total includes my payroll AND employer contributions.

[alenny22]

On my HSA Summary, the tax-free employer contributions show the total amount from my W-2, but I know that my employer only contributes a portion of that and the rest is what I personally contributed.

[MindyB]

Your W-2 is correct.  Box 12 Code W should include both your and their contributions made via payroll.

When TurboTax asks  "Any contributions you personally made (not through your employer)" DON'T enter the amounts you contributed through paycheck withholding. It has already been considered through your W-2 entry. Personal contributions refer to contributions you send directly to the HSA via check or EFT, not through payroll.

[alenny22]

Hi MindyB,

I made sure to enter 0 when it asks for "Any contributions you personally made (not through your employer)" because all contributions were made via payroll.

Why is it that I cannot specify how much of that total was from my contribution? I did most of it and in the summary it's saying they did 100% of the contribution - this is incorrect and I cannot change it.

[AnnetteB6 · Accepted solution]

It does not matter whether the contribution actually came from your paycheck or from your employer.  It is all counted together toward the contribution limit of the HSA.  

When it is reported on your W-2, the description sounds like the employer is the one who made the contribution, but it is really trying to say that the contribution was processed through the employer's payroll system.  There is not a distinction between the part that came from your wages and the part that came from the employer.

As long as the total amount shown on your W-2 in box 12 with code W is accurate, then you are good.

@alenny22 

[zozozoo]

I think that response is incorrect.  I believe it makes a big difference on the tax liability because turbo tax considered it as income.  I compared turbo tax against HR block(I used to use HR block), the difference on the owe amount(federal) as soon as I imported my w2 without other income and deductions.  In TurboTax, I owe 18+k, in HR block, I owe 5-6k which is more like the number based on the income/bracket calculations from nerbwallet.   

[BillM223]

Both Mindy's and Annette's responses are correct.

The issue is the IRS terminology. The IRS calls the code W amount the "employer contribution". This is not in reference to the source of the dollars, but to the fact that all these dollars are handled by the employer, both the amount that the employer contributes AND the amount that the taxpayer contributes through payroll deduction.

When you initially enter the W-2, the code W amount is considered taxable, because the IRS considers the code W amount to be taxable UNTIL you go through the HSA interview and show that you have the required HDHP coverage.

When you go through the HSA interview, at the end, the code W amount will be non-taxable, if you showed the proper HDHP coverage and if the contributions were not in excess.

[Jasjordan15]

In California it wants to use the whole amount, employer and employee paid, as taxable. The larger amount is from my payroll; aren’t I being taxed twice?

[BillM223]

No, you are not being taxed twice.

HSA contributions made through your employer (code W in box 12 on your W-2) are removed from Wages in boxes 1, 3, and 5 when the W-2 is printed. This is the way that employer (i.e., made through your employer, no matter what the actual source is) HSA contributions are a tax benefit - These HSA contributions are not taxed because they are never in your income in the first place.

Thus, because California does not recognize section 223 of the US Tax Code which makes HSA contributions to be tax-advantaged, the HSA contributions are added back to state income - this is being taxed just once, not twice.