topic Only Employer HSA Contributions Taxable in CA? in State tax filing

Only Employer HSA Contributions Taxable in CA?

Don_N — Sun, 09 Feb 2020 15:25:23 GMT

My employer contributes $2k into my HSA. I also contribute to the HSA through payroll deductions. The CA state tax is calculated on W-2 box 12 code W which includes employer and employee contributions. Does the employee (my) contribution get backed out so only $2k is taxed?

From the help/guidance in turbotax;

What should I know about contributions to a Health Savings Account (HSA)?

If your employer contributed money to an HSA on your behalf, that contribution is not taxed by the federal government. However, California considers it taxable income.

W: Company contributions (including employee contributions through a cafeteria plan) to an employee's health savings account (HSA)

Re: Only Employer HSA Contributions Taxable in CA?

JotikaT2 — Sun, 09 Feb 2020 19:23:23 GMT

No, it does not matter who made the contribution.

It does not matter if it's the employer contribution or your own contribution, all amounts are considered made to the HSA, even for California. Therefore, the entire amount would be an adjustment on your California return.

You can contribute $3,500 for an individual plan or $7,000 for a family plan with the combined contribution between your employer and yourself. If you are 55 or older, you can contribute an additional $1,000.

Re: Only Employer HSA Contributions Taxable in CA?

Anonymous — Wed, 22 Feb 2023 20:17:21 GMT

https://www.ftb.ca.gov/tax-pros/law/legislation/2021-2022/AB727-010322.pdf

As per this bill, I think employer HSA contributions are also not taxable. But Turbox seems not updated with this logic in 2022 software. Can you please review this.

Re: Only Employer HSA Contributions Taxable in CA?

BillM223 — Wed, 22 Feb 2023 20:38:58 GMT

TurboTax is correct to have not updated its software to reflect this logic.

Bills similar to AB 727 come up every year in California, but unless they pass the Legislature and are signed by the governor, they have no legal effect. Please see CA AB 727 2021-2022.