[PA State Taxes form] Cannot edit HSA personal contribution for PA part-year resident

[qwertyqoph]

The online web browser version doesn't allow me to edit how much of my HSA personal (non-employer) contribution was made as a part year resident of PA

Details: $406 was contributed personally to my wife's HSA plan out of pocket. This was made while we were part year residents in OH and deducted accordingly on OH state income tax form. However, for PA state income tax form, since it auto-populated the $406 from the federal form, there's no way to edit the $406 that was contributed out of pocket to $0, since the contribution was made entirely while living in OH.

Please fix the PA State Tax form for MSA/HSA contribution deductions, allowing the deduction to be editable similar to OH's state tax form. See below for how the deduction is editable/allocable in the OH State Tax form, but not editable/allocable in the PA State Tax form. 

[BillM223]

If you have W-2 compensation in Pennsylvania, here is a workaround for you. In the Pennsylvania interview, go to the screen "Compensation Summary". 

Click on the pencil to edit your compensation for Pennsylvania.

On the next screen, check off that you need to make an adjustment to the taxable amount of your income.

On the next screen, reduce your Pennsylvania compensation by $406 and hit Continue. While this may not be the way that the state want you to show the personal HSA contribution amount, the net result on your state taxable income will be the same.

Conversely, if you don't have W-2 compensation in PA, you might try adding a miscellaneous income amount of -406 and see if that works for you (I have not tried it).

[qwertyqoph]

Hi @BillM223,

Thanks for your help, but I wanted to double-check the logic on this. Wouldn't it be more accurate to add a positive value to my Pennsylvania compensation? Since I'm trying to undo the incorrect HSA deduction by that exact amount, adding it back should increase my taxable income.

When I did it the way you suggested, it actually led to a higher tax refund. Essentially, I'm trying to make sure I don't claim a deduction that I don't have a right to claim. Because of that, correcting this should logically increase my tax liability (decreasing my refund), not decrease my liability (increasing my refund). Could you clarify if adding a positive value is the correct way to handle this so that I'm reporting it properly?

Also, while I appreciate the workaround for now, is there any way you could ask your software team to fix this underlying error? I am hesitant to use this workaround because I really don't want to falsify or enter incorrect information on my W-2 or Miscellaneous income just to bypass a limitation in the software.

Thanks again!

[qwertyqoph]

Hi, 

I wanted to provide some updates for those who are either affected by a similar tax situation or for those trying to fix the issue:

1. Pennsylvania does allow for the deduction of personal HSA contributions. You can verify this directly on the PA Department of Revenue's website here: PA Personal Income Tax Guide - Deductions and Credits.

2. Regarding the software issue, I have already double-checked and verified the following to a T:

• HDHP Eligibility Months: I confirmed in the federal return that the months of eligibility for the HDHP plan perfectly coincide with my Ohio residency dates, and NOT my Pennsylvania residency dates.

• Residency Dates: I verified that the partial-year residency dates are entered correctly in both the individual PA and OH state tax returns.

Despite ensuring all of this information is accurate, the TurboTax software allows me to edit the allocable HSA contributions on the Ohio state return, but completely locks the field on the Pennsylvania state return.

Given that PA allows this deduction, this appears to be a glitch in the software that incorrectly restricts PA part-year residents from editing their allocable HSA contributions. Please escalate this issue to the software development team so they can build this out and fix it for the PA state taxes. I imagine this limitation will negatively affect other part-year PA residents like myself who personally contribute to an HSA.

[qwertyqoph]

@RogerD1 

Hey Roger, you helped fix and/or report back the other glitch I caught (https://ttlc.intuit.com/community/retirement/discussion/bug-report-error-1101-blank-screen-when-box-...). Can you do the same thing with this glitch? Trust me, you know that I've tested the user-end side of things to know what I'm talking about. 

Thanks!

[RogerD1]

There is a way to make an adjustment on the Pennsylvania return to include this contribution in the PA taxable income.

As you go through your PA return, you come to a screen titled "Any other miscellaneous compensation" - click Yes.

On the next screen, you click your wife's name and under payer name, put "HSA Adjustment".  For the Type of Income, select "Other income not listed above".

On the next screen, you'll leave the Federal amount blank and enter the PA amount as $406.  for Income Description, you can enter "HSA Contribution not made in PA".

These actions will add this back as compensation for your wife on your PA return and it will later be deducted on the PA return, so that the net effect will be a zero HSA contribution made while in PA.  The HSA adjustment will get reported on PA-40 Gross Compensation Worksheet as an addition to income

[qwertyqoph]

Hi @RogerD1 , 

Thanks for providing this workaround. However, as I alluded to in an earlier post, I am really hesitant to fabricate non-existent miscellaneous income just to undo a deduction I shouldn't be claiming due to a software glitch. Falsifying income doesn't seem like the right way to bypass a limitation in the software. I would really prefer that the underlying glitch be escalated and fixed so the software correctly handles this for PA part-year residents.

Additionally, this workaround doesn't solve the issue that the PA state income tax return requires pages 1 and 2 of the federal Form 1040 to be sent alongside Form 1040, Schedule 1 (see screenshot below) with my return whenever an HSA contribution deduction is claimed.  I want to avoid having to deal with PA state tax officials claiming my tax return is missing documents like Form 1040, Schedule 1 in the future.

Could you please escalate this issue to the software development team so they can properly resolve the bug?

Thanks again for your time and help!

[RogerD1]

Unfortunately, the only solution to this situation is the one I had given you.  The solution I gave you came from a post in 2021 about allocating HSA contributions in TurboTax.  The inability to allocate the contribution directly is not a bug as the solution is suitable for reporting to PA.

The net effect is that the HSA contribution made outside of the employer will not be allocated as a deduction to PA income, which is the desired end result.