My W2 box 16 already includes HSA contribution from the employer in Box12c-W. In CA state tax worksheet Form 540, Why is turbotax adding line17=line16+line15...?

Forum|Forum|7 years ago
June 5, 2019
2 replies
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My W2 box 16 (state wages) already includes contributions made by me and the employer. But Turbo Tax is adding the same amount again. i.e.

TurboTax Deluxe Windows

BillM223

Level 15

TurboTax does not make the presumption that the California Wage amount includes the add back for the HSA contributions; therefore it adds the amount of the HSA contributions back for you.

You have noticed that the HSA contributions are part of your California wages (i.e., they are not pre-tax). In this case, you can counteract the TurboTax automatic adjustment by going to the screen entitled "Here's the income that California handles differently" and looking at the bottom at the line "Other Adjustments to Income".

Click on Start and enter "Duplicate HSA add-back" for description and the amount of the HSA contributions as a Subtraction (so it will be subtracted from your state income).

[Edited 2.27.2018 | 13:32 CST]

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BillM223

Level 15

I corrected a typo - in the second paragraph, I changed "after-tax" to "pre-tax", as it should have been.

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getalbert

Level 2

Has there been guidance on Box 16 to always include the HSA contributions for CA? Turbotax should assume that it is included instead of "double" taxing the customer. At least let the customer know that the "double" taxing could occur in CA.

getalbert

Level 2

Actually Jim is right on this one. Turbotax is calculating this correctly. It's confusing because box 16 (State Waged) shows up on Form 540 but it isn't used.

taxes99

Level 2

agree with Jim and getalbert

There is a caveat though if your company contributes to your HSA:

If not, then add TT should add full amount (for 2025 I believe $8550)

If company contributes, then that amount is already reported in Box 1 on W2 and therefore on 540 box 13.

So TT should only add what has been subtracted from W2.

Eg:

if company contributed $1000 to your HSA, and you have high deductible plan for family, then you only contributed 7550 and that is what should be added to your wages for CA (not full 8550).

Ij my example, it looks like TT does that correctly. This would only be important if for some reason you do manual modifications.