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My Tax draft shows Deduction line item of 2750. I would like to understand why ? Here is scenario : FY23 > total contribution by employer is 5000, no other contribution

FY23 : employer contribution 5000, no other contribution, 
From FY22, 2900 non utilized amount carried over to FY 23 in HSA account,

May i know why 2750 is getting reported as deduction  even though only contribution is 5000?
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1 Reply
BillM223
Expert Alumni

My Tax draft shows Deduction line item of 2750. I would like to understand why ? Here is scenario : FY23 > total contribution by employer is 5000, no other contribution

There are two types of HSA contributions: one through your W-2 (so, your employer plus you by payroll deduction), and direct contributions by you not through your employer.

 

The HSA contributions in the first case are marked by a code W in box 12 on your W-2. This same code W amount is removed from Wages in boxes 1, 3, and 5 before your W-2 is printed. There is no "deduction" for this kind of HSA contribution, because it was never in your income in the first place.

 

The second kind of HSA contribution IS a deduction. It is reported on line 13 on your Schedule 1 (1040).

 

When you have a carryover of excess HSA contributions, like it sounds like you did, this carryover is reported in the following year as a personal or direct contribution (line 2 on form 8889). It sounds like the 2900 got carried over, but you made other contributions so that only 2750 of that carryover could be used this year. So the 2750 goes to line 2 (8889) and shows up as a deduction. 

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