Why does Turbotax want to tax my HSA contributions?

Ive entered the amount in box 12 code W into Turbotax and this immediately causes my tax bill to increase. Ive always been under the impression HSA funds are tax free so I dont understand why this happens.

Of course its possible that Im completely misunderstanding that, but if someone can let me know that would be greatly appreciated.

Thanks much for any information!

Expert Alumni

Mar 28, 2023 2:00:07 PM

Don't enter any additional contributions in the HSA section. TurboTax automatically carries over the code W amount from your W-2 to Form 8889. You have to go through the follow-up questions in the HSA section and indicate you had HDHP coverage to keep the amounts tax-free.

Search for HSA and use the Jump to HSA link to get to the questions. If you entered the Code W amount in this section, delete it and be sure to answer the questions about having an HDHP.

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Why does Turbotax want to tax my HSA contributions?