When I updated my filed return, it shows that W is for Employer contributions and this actually increased my tax liability. Is this correct when I actually contributed this amount to my HSA account?
Sort of.
When you enter code W, TurboTax automatically assumes you did not qualify to contribute to a HSA, so it adds a tax and penalty. Later on in the interview (in the HSA section) it will ask you questions that find out if you qualify for contribute to the HSA. If you do qualify, TurboTax will then remove that tax and penalty.
Assuming you qualify, your tax will be the same, but your amended tax return will include that Code "W" amount on Form 8889.
https://ttlc.intuit.com/questions/1894381-how-to-amend-change-or-correct-a-return-you-already-filed
Sort of.
When you enter code W, TurboTax automatically assumes you did not qualify to contribute to a HSA, so it adds a tax and penalty. Later on in the interview (in the HSA section) it will ask you questions that find out if you qualify for contribute to the HSA. If you do qualify, TurboTax will then remove that tax and penalty.
Assuming you qualify, your tax will be the same, but your amended tax return will include that Code "W" amount on Form 8889.
https://ttlc.intuit.com/questions/1894381-how-to-amend-change-or-correct-a-return-you-already-filed