HSA

[tadefor]

Quick question:

I'm in the middle of preparing taxes through turbotax. We have an HSA account and when I clicked on option that says we are covered by HDP (high deductible plan) then my federal refund suddenly got a lot bigger. I just want to make sure this sounds correct

[RogerD1]

Yes, this is the expected behavior.

In order to make contributions to a Health Savings Account, you need to have High Deductible Health Plan Coverage.  TurboTax was considering these contributions to be taxable until you checked that you High Deductible Health Plan.  I used a mock return to confirm that the refund did increase when I checked that the taxpayer had an HDHP.  

[Mike9241]

it depends on how the qualified HSA contributions were made. If 100% through your employer, there should be no effect on your income taxes because wages in box 1 of the W-2 were already reduced. You do not enter them as personal contributions. They will appear on line 9 of Form 8889. Direct personal contributions will reduce your taxable income and should appear on line 2