Unable to get NY tax-deductible on employee only HSA Contribution coded as 'W' on W2 box 12.

[girishkm]

Since onset of HSA, I have been religiously contributing to the Health Savings Account (HSA) every year.

Even though my employer doesn't contribute anything to my HSA account, it is reported on my W2 as "W" on Box 12. 

As per IRS instructions, the code W indicates contributions can include from both employer and employee.

In my case it is just me (employee) contributing to HSA. However, according to my accountant, I have been told that I won't be able to get New York state tax deductible for my HSA contribution since it is coded as W on Box 12 of W2. Accountant also as filed Form 8889 showing HSA contribution as employer contribution and not as employee contribution because it is coded W on Box 12. Is that correct filing?

Also wondering, is it possible to avail New York tax-deductible for my HSA contributions?

Any advice on this would be greatly appreciated. Thanks

FYI:  IRS instructions on W2 box 12 for code "W": 

• W – Employer contributions (including amounts the employee elected to contribute using a Section 125 cafeteria plan) to your health savings account (HSA). (Not included in Box 1, 3, or 5.) Report on Form 8889, Health Savings Accounts (HSAs).

[Bsch4477]

Code W indicates that your employer has contributed to your HSA on your behalf and has not included that amount in your pay. If so, you are already receiving a tax advantage.  Check with your employer. 

[SusanY1]

Since your contribution is coded as "W" on your W-2, you do not receive any additional deductions for state or federal returns.  Your Box 1 income is already adjusted to reflect this amount.  The code doesn't distinguish between employer-paid and employee deductions since both adjust the Box 1 amount accordingly.  

The additional deduction is for contributions you make to your HSA outside of payroll deduction, on your own, with after-tax dollars.   

There isn't (likely) any error on your W-2, rather those types of contributions aren't the ones manually added later on the tax returns for additional deductions.  

 

[Opus 17]

I think your accountant did not explain things to you properly.  

Under IRS regulations, this type of benefit plan is handled according you to agreeing to a salary reduction, with the money being sent by the employer to the HSA plan on your behalf.  Therefore, all contributions made by an employer plan (including your own money plus any match) are considered "employer" contributions by regulation and are included on your W-2 with code W.  The contributions are already subtracted from your box 1 federal and box 16 state taxable wages.  You already got the maximum benefit possible and aren't being taxed on the money.  You can't take another tax deduction for the same money.

If you made extra contributions out of pocket (not through payroll) they are tax deductible, as long as your payroll plus out of pocket contributions are not more than the allowed maximum for your age and type of insurance. 

If your box 16 state wages are higher than your box 1 federal wages, you may have a problem with your payroll department, but not with your tax return.  

[girishkm]

Thank you, I will check with my employer to see if they have adjusted Box 1 accordingly.

[girishkm]

Thank for your reply. I will check with my employer to see if they have adjusted Box 1 accordingly.