2019 Tax Amendment for HSA contributions

[mecit]

Hi, 

I am trying to amend my 2019 tax return because it seems to me that HSA contributions in 2019 are not excluded from my wages when calculating for a tax break. I double-check my 2019 return form and it only consists standard deduction from my wages. 

When I try to enter HSA contributions, it directly imports it from W2 as "W-Employer Contributions to Health Savings Account". The issue is when turbo tax pulls this information in the tax return form, it shows zero for the following line. 

13 HSA deduction. Enter the smaller of line 2 or line 12 here and on Schedule 1 (Form 1040 or
1040-SR), line 12, or Form 1040-NR, line 25
So, when calculating the overall tax return, this becomes the math behind the calculation: (Income Wages - Standard Deduction) x Percentage for Federal Income Tax (or State Tax percentage). 

If my understanding correct, then this equation should also deduct HSA contributions. However, it doesn't allow me to enter anything, and it shows zero deduction in the "Deduction and Credits" section. Is there a way to fix this issue? 

[BillM223 · Accepted solution]

The way it actually works is this:

When your employer or you through payroll deduction make contributions to your HSA, this amount is reported in box 12 on your W-2 with a code of W. This amount is also removed from Wages in boxes 1, 3, and 5 on your W-2 before it is printed.

This is why you do not see this as an HSA deduction on line 12 of Schedule 1 (1040) - because it was never in your income in the first place.

While this is counter-intuitive, this is also good for you, because you don't pay any Social Security or Medicare taxes on the code W contributions either (remember, the code W amount was removed from Wages in all three boxes: 1, 3, and 5).

You can also make direct contributions to your HSA. This amount appear on line 12 of Schedule 1 (1040) and also in the various screens in TurboTax. This amount is removed from income as an adjustment to income, but it does not reduce your Social Security or Medicare taxes.

So what you see is "working as designed" (by the IRS, not us), and is the best result for you.

So, if I understand what you are trying to do, you don't need to amend your 2019 return, because it was correct...and I hope you didn't try to do this on your 2020 return.