New Jersey NonResident HSA deduction

[vspede]

I know California and New Jersey don't allow deductions for HSA contributions.

But as a nonresident you can deduct HSA contributions for California.  Can you do as well for New Jersey?  I've tried googling and I've seen nothing. 

[BillM223]

Were these HSA contribution done through your employer (code W in box 12 on your W-2), or directly to the HSA custodian? If in the first case, was the income earned from California or New Jersey sources (i.e., you were working in California/NJ or the money was made in California/NJ)? In the second case, were you living in California/NJ at the time of the HSA contribution?

The answer depends on whether there is a nexus to California or New Jersey for these HSA contributions. So tell us about the manner of the HSA contributions, where and when they were made, and why you are filing a nonresident New Jersey return.

[vspede]

My residence is Illinois full time and the HSA contributions were done through my employer.   I was just using California as an example but I have to file a nonresident return with New Jersey this year.

[BillM223]

OK. What about the other questions?

Is the income through your employer New Jersey source income? Why do you have to file a non-resident NJ return?

[vspede]

I spent 2 weeks in New jersey for a client.  Hence I got a new jersey w2.  The New Jersey w2 shows state wages $5416 and and income tax of $146.  Turbotax says i need to file as a nonresident since my main residence is Illinois (I live in IL).  But when I run the state it says I owe New Jersey $98.

I'm wondering if this is because of the HSA.  That's the only thing I can think of. 

[BillM223]

I take it you have seen your NJ return, because tax due could be due to many things.

But, yes, I would think you would want to adjust your NJ return for the HSA contributions.

May I assume that State Wages (box 16 on your W-2) shows the Box 1 Wages plus the code W amount? This would be what the starting point would be for NJ Gross Income.

If so, when you get into your NJ interview for a non-resident return, you should pretty quickly come to a screen entitled "Other Wage Adjustments - W-2".

In the detail boxes below, enter something like "HSA non-resident adjustment", and a negative number. 

The negative number should be the amount of HSA contributions not attributable to New Jersey. You can calculate this by taking your code W amount (i.e., your total "employer contributions") times the ratio of your NJ wages divided by your total W-2 wages, and then subtracting the result form the code W amount. This should result in Gross Income for NJ not including the code W amount, except for the small amount attributed to NJ.

See if this gets you to a more appropriate result.