My W2 shows a balance in box 12b with a code W. This is taken up by TurboTax as an employer contribution. However, the full amount listed was my contribution deducted from my pay by my employer. My employer did not contribute to my HSA. This is having an impact on the calculation of my CA tax return since it is viewed as income rather than an expense. I attempted to manually change it on the Form 8889-T but I am unable to zero out the employer contribution that TurboTax automatically loaded. How can I correct this?
You don't need to correct anything.
No HSA contributions, whether made by you or your employer, is a deduction from income for California.
The California state return starts with the Federal AGI but does not recognize the HSA deduction that the federal return gave you, so that is all added back, what you made as contributions and/or what the employer paid.
It isn't the best wording as the contributions are not posted separately, yours and your employers. What ever is made through payroll is termed as employer contributions.
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