I live in NC and I noticed TT added my HSA contribution (code W) back to the taxable income. I believe this is wrong and TT didn't add the contribution last year.

I don't know why the HSA contribution would have been added back to North Carolina income - and in my test, it isn't.

Please tell me what NC form you are looking at and on which line the HSA contribution appears.

Also, was your HSA contribution through your employer (code W in box 12 on your W-2) or was to made directly to the HSA custodian? 

My contribution was through my employer and is in code W in box 12 on my W-2.

I'm looking at the federal 1040 form line 7a that adds back this contribution. This line item refers to Schedule 1 line 9 which shows that it's taking the HSA contribution.

Neither line items existed in the 2018 1040 form.

Did you receive an excess HSA contribution message? That is one reason that the code W amount would appear there.

Or is it the case that you have not completed the HSA interview?

According to IRS rules, the HSA contribution is considered taxable until you have answered the questions in the HSA interview about having qualifying HDHP (High Deductible Health Plan) health insurance.

Therefore, when you enter your W-2 with its code W amount in box 12, this amount is added to Other Income temporarily, and when you answer the HDHP coverage questions in the HSA interview, then, that amount is removed from Other Income and disappears from line 7 on form 1040.

Note: your code W amount is removed from Wages in boxes 1,3 and 5 by your employer before the W-2 is printed. This is how the code W amount is "deductible". Hence if the HSA contribution turns out to be taxable, it must be added back to your income.

I had not gone through the HSA interview. After doing it, the HSA contribution has now been removed from the taxable income. Thank you!