I cant get form 8889S to work properly. Turbo will not allow e filing because of override on this form to get HSA deduction on 1040.

[BMcCalpin · Accepted solution]

First, did your spouse have an HSA in 2018? If not, then the 8889-S is just a worksheet that will not be filed.

Second, if your spouse did not have an HSA in 2018 but you are getting errors in the Review on the 8889-S, then I have to ask why did you override anything on with the 8889 or on the 1040 Schedule 1? If you answer the questions correctly in the HSA interview, there is no need of overrides.

Third, since I cannot see your tax return, I am having to guess, but it seems likely that you forced the entry of a deduction for the HSA on Schedule 1 (Form 1040) and/or on the 8889 because you did not see the deduction when your spouse had contributions made through your spouse's employer. Please note that contributions made by the employer PLUS contributions made by the employee through payroll deduction do not appears as a deduction on your tax return - instead this amount is removed from Wages in boxes 1, 3, and 5. It does not appear as a deduction because it was never in your income in the first place. If you did this, please remove the override.

If this does not describe your situation, pleas comment back with the specifics:i.e., where and what did you override, what was your spouse's code W amount in box 12 on the W-2. where there any direct contributions to the HSA, etc.?

[naraine]

Thank you for the excellent response.  I removed override and e filed returns yesterday.

[BMcCalpin]

Great!

[paulkari13]

I have a similar issue with form 8889-T.  The total contribution amount to my HSA shows on my W2, Box 12c, CodeW, but in reality, I contributed a portion ($3,000), and my employer contributed a portion ($1,000).  Form 8889 pulls in the total of $4,000 as all employer contribution.  This causes my state tax to incorrectly increase my income by an $3,000.  I put in a manual override to line 9 to show my employer contribution of $1,000.  TurboTax will not let me e-file because of this.  Can TurboTax fix this?

[BillM223]

TurboTax is not doing anything wrong.

The code W amount in box 12 on your W-2 is what the IRS considers the "employer contribution". This consists of both what your employer contributed AND what you contributed through payroll deduction. Therefore, the 8889 is correct to report it as the employer contribution.

Yes, this is counter-intuitive, but it's the IRS's terminology, not ours. Besides, you want your contributions through payroll deduction to be reported this way, because not only is the code W amount removed from Wages in box 1 on your W-2, it is also removed from Wages in boxes 3 and 5, so you don't pay Social Security or Medicare tax on the contribution. You had a tax benefit and didn't even realize it.

So please undo whatever override you did because it is not necessary.

It is correct for any contributions through your employer to appear with a code W in box 12 on the W-2. Do NOT enter this amount anywhere else on your return (like as a "personal" contribution in the HSA interview).

Is your state California or New Jersey? Then TurboTax correctly added all HSA contributions to state income, because they are not deducted in those states.

But you think that you don't have a deduction? The line 12 entry on Schedule 1 (1040) is only for HSA contributions that you made directly to the HSA custodian, not through your employer. 

The HSA amount in box 12 is not reported as a deduction because it was removed from Wages in boxes 1, 3, and 5 before your W-2 was printed. So it's not a deduction because it was never in your income in the first place.

All clear?