Employer HSA contributions added back to CA income

[sbomkamp]

TT adds HSA contributions back to my CA income for my state return. My W2 Box 16 state wages already contains this HSA add-back, i.e.) On my W2, Box 16 state wages = Box 1 fed wages + Box 12W employer HSA contributions. How do I correct the duplicate add-back?

The work-around last year was to enter an offsetting amount in the Miscellaneous Adjustments under Other Adjustments to Income. Is this still the correction to account for this issue?

[BillM223 · Accepted solution]

As it turns out, the fact that your employer included the HSA contributions in box 16 on your W-2 doesn't make any difference. 

While this number appears on page 1 of form 540 on line 12, in fact, it is never used anywhere on the return, so there is no duplicate add-back.

The CA return starts with federal adjusted gross income (which includes the HSA exclusion), so CA has to back out the exclusion by adding the code W amount (from box 12 on the W-2) to line 1 of form CA(540), so that it can be an addition to CA income on line 16, form 540.

No further adjustment is necessary.