HSA contribution increased federal taxes??? Is there a bug in the program?

[BillM223]

No, this is not a bug.

This is the reason that the Refund Meter was removed from such a prominent position in TurboTax 2024, because too many taxpayers were watching it screen by screen and making the wrong conclusion when the tax jumped.

TurboTax has to do a lot of things behind the scenes, and sometimes they are not done for a while.

In this case, the HSA contributions described with code W in box 12 on your W-2 are not non-taxable until you have gone through the HSA interview to show that you have proper HDHP coverage. Since most taxpayers enter their W-2s first and the HSA interview quite a bit later, they mistakenly assume that TurboTax is incorrectly taxing their HSA contributions.

Just complete the HSA interview (Deductions & Credits->Medical->1099-SA, MSA, HSA), and you will see that the code W amount has been removed from your income.

[barristerinky]

Yep, its a bug.. no question about it.  I go through the interviews for both myself and my wife..  When I go through mine.. no problems...  taxable goes up and then back down once the interview is done.   I go through hers... as soon as I enter the 4150 in the amount contributed, it takes the amount owed up to triple...  I do the interview and confirm the same things as on mine... and it doesn't bring the amount owed back down.

But if I go to the forms view and delete hers.... like magic... back down to the correct amount owed... but only shows my 4150 contribution.

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So... playing with it for a bit... the "magic number" is 3966... at that amount, it doesn't trigger the bug... at 3967.... bam.. there is the bug and triples what the fed tax due is.  Anything over 3966 and it bugs out...

So if it walks like a bug, acts like a bug, and reacts like a bug.. its a bug.

[SharonD007]

No, there isn't a bug in TurboTax for HSA contributions.  Go back through your answers to make sure that the questions are answered correctly regarding your HDHP.

Is your wife covered under your HDHP?  If so, the question, What type of High Deductible Health Plan did [spouse] have on December 1, 2024 should be answered None. The question is referring to the HDHP that your wife may have had in her name.  

To return to the section, to go over the questions again. Follow the instructions below:

1. Open TurboTax 
2. Select Deductions and Credits
3. Scroll down to Medical and select Revisit next to HSA
4. Edit your answers in the HSA interview and make sure that you answer None for your spouse.

For information, refer to the TurboTax article What is a high-deductible health plan (HDHP)?

If you still need help, reply back.

[barristerinky]

Is your wife covered under your HDHP?  If so, the question, What type of High Deductible Health Plan did [spouse] have on December 1, 2024 should be answered None. The question is referring to the HDHP that your wife may have had in her name. 

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Thanks for the reply...   This is my situation... I am a self employed attorney.. wife is a self employed realtor.  I have my own HDHP for myself and my wife has one for her and my children because it was cheaper than getting one for the whole family.  So we each have our own separately.

When going through the entry and interview, my taxes owed went from $4K or so after I did my HSA entries, up to 12K after I entered her 4150 contribution and went through the interview for her stating that she had her own HDHP for a family plan.     Then the desktop version sticks and won't let me delete that unless I manually delete the form in the forms view.

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After deleting her form, taxes owed back down to the 4K...