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Why does my HSA deduction add to the standard deduction of $24000 making the total deduction 25880? This is what turbotax is telling me. Is this correct?

 
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Why does my HSA deduction add to the standard deduction of $24000 making the total deduction 25880? This is what turbotax is telling me. Is this correct?

It is my understanding that the HSA deduction is entered on Schedule ! line 25 as an adjustment to income. The adjusted gross income on line 7 of form 1040 then includes the adjustment from Schedule 1 line 25. The result is the same. It reduces the amount of income that you must pay tax on. I haven't actually entered an HSA deduction on a tax return to verify where TurboTax enters it.

Why does my HSA deduction add to the standard deduction of $24000 making the total deduction 25880? This is what turbotax is telling me. Is this correct?

Texas Roger is correct that a direct contribution to an HSA is entered on line 25 of Schedule 1 of Form 1040. However, the majority of HSA contributions are made on the W-2 in box 12 with a code of W. In this case, the code W amount is removed from Wages in boxes 1, 3, and 5. So there is no deduction on the return for the code W amount because it was never in your income in the first place.

I do not know of a way that an HSA contribution would appear as part of the standard deduction. I do not know of a way for the standard deduction to be $25,880.

Itemized Deductions can be $25,880, if the sum of all your itemized deductions adds up to this amount (because it exceeds $24,000). The only role that the HSA has in itemized deductions is that the amount of HSA distributions (reported on 1099-SA) is automatically subtracted ffrom your reported medical and dental expenses, just like insurance reimbursements are. That is, the HSA distribution reduces the amount of your itemized deductions, unless you entered the amount of the HSA-reimbursed medical and dental expenses in the Medical Expenses interview.

For most taxpayers, it's easier to just make a single entry in the Medical Expenses interview at the end where it asks for other expenses: "HSA-paid medical expenses", with the amount equal to the amount of the distribution on the 1099-SA.

In short, TurboTax is not changing your standard deduction, and its effect on itemized deductions is subtractive, not additive. Something else is happening. But since we cannot see your tax return nor the screen you are one, we can't tell you what.

Since you have the desktop software, look at Schedule A in the forms list as well as at the worksheets underneath (Medical Wks, Tax & Int Wks, Home int Wks, and so on, to see where the $25,880 actually came from.

The HSA numbers can be found on form(s) 8889.

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