Why can't I deduct my HSA?

[Anonymous]

I meet all requirements but the automated system is not showing a deduction.

[BillM223]

There are two ways to make a contribution to an HSA, one through your employer and the other directly to your HSA not though your employer.

If you make an HSA contribution directly to your HSA not through your employer, then this appears on line 12 on Schedule 1 (1040) as an adjustment to gross income.

If, however, either your employer made contributions to your HSA or you did through payroll deduction, then this total is reported in box 12 on your W-2 with a code of W.

NOTE: this amount was already removed from Wages in boxes 1, 3, and 5 before your W-2 was printed. That's why you don't see it as a deduction, because it was never in your income in the first place. Make sense?

[Anonymous]

Doesn't quite make sense. If what you say is true, then that explains my problem, because my employer did not deduct my contributions from box 1. However, page 17 of 2020 General Instructions for Forms W-2 and W-3 lists items to include in box 1. Item 18 reads "employee contributions to a health savings account." So it would appear, according to this IRS document, that my contributions should be included in box 1.

[Critter-3]

What you contributed thru an employer's payroll system and reported as code W in box 12 of the W-2   is already pre taxed so you do NOT get to deduct it again on the return.    Do not enter the amount again later as double dipping is not allowed.  

[Critter-3]

From page 11 of the W-2 instructions ... 

Health savings account (HSA). An employer's
contribution (including an employee's contributions
through a cafeteria plan) to an employee's HSA is not
subject to federal income tax withholding or social
security, Medicare, or railroad retirement taxes (or FUTA
tax) if it is reasonable to believe at the time of the payment
that the contribution will be excludable from the
employee's income.

[Anonymous]

If my contribution is not subject to federal withholding then it should not be included in box 1, but it is as I can see from simple math. And according to the same document you reference, it SHOULD be included. Which means it would have to be deducted elsewhere to obtain the tax benefits. 

[Critter-3]

Ok ... are you trying to fill in a W-2 for an employee ???    Or are you the employee trying to dissect the W-2 the employer gave you ???

If the latter, then enter the W-2 as printed and stop second guessing it.  If you believe it is wrong then discuss this with the employer.  As I said before ... if there is a code W in box 12 then you cannot deduct it again as an adjustment.   

[Anonymous]

Well ultimately this doesn't address my question. My contributions are in fact listed with code W in box 12. I correctly enter it along with the rest of my W2 yet it states I have zero deductions for my HSA. That is with all other qualifications...HDHP, no Medicaid, etc. If I meet all the requirements, my understanding is that box 12, less any actual employer contribution, should be a deduction .

[mason343]

No, you are mistaken. Any money deducted from your paycheck (and then appearing on your W-2, line 12, letter W is NOT deductible because you never paid taxes on it to start with. Thats what the other user was trying to explain. Your gross was reduced on your paycheck by the amount that you contribute before any taxes were withheld. You can only deduct any amount that you personally paid directly to your HSA, NOT amounts through payroll deduction. Obviously, I can't speak to your W-2. Perhaps, although it is unlikely, its incorrect. But the payroll deductions that went to your HSA are not deductible.