I am unable to override Line 9 on Form 8889 "Employer contributions made to your HSAs for 2021"

[Tuser7070]

I am unable to override Line 9 on Form 8889 "Employer contributions made to your HSAs for 2021" in order to CORRECT the employers HSA contributions, derived from the W2

Contrary to what TurboTax thinks is correct, the amount reported in a W2 in Box 12 Code W is NOT necessarily ONLY the employer's contribution to an HSA. In my case, my employer is reporting its HSA contributions PLUS my HSA contributions. (Reporting my contributions on Line 2 would cause double-counting)

The end result is my credit reported on Schedule 1 (Form 1040), Part II, line 13 will be WRONG).

It is not realistic for me to get my company to re-issue W2's to all its employees.

[RaifH]

If your HSA was funded via paycheck deductions to a cafeteria plan, you are already receiving the deduction from your income. That is because the compensation used to fund your HSA is not included as taxable income in Boxes 1, 3, or 5 of your W-2. It is also a deduction from most states' taxable incomes.

Since you are already receiving the reduction in your taxable income, you do not also get to adjust your income for the deduction by taking the HSA deduction on Schedule 1. If you contributed out-of-pocket, then the contribution would be entered on Schedule 1. 

[Tuser7070]

So "Employer contributions..."  is not the same as "Employer paid-for contributions". Got it thanks.

[BillM223]

We at TurboTax are constrained to using the IRS's terminology. The reason why the IRS refers to the amount on the W-2 as the "employer contribution" is because contributions through the employer are treated differently than contributions you make directly to the HSA custodian.

As Raif noted above, the code W amount on your W-2 is removed from Wages in boxes 1, 3, and 5 before your W-2 is printed; thus it is a tax benefit because these contributions were never in your income in the first place.

But just as important, because the code W amount is removed from Wages in boxes 3 and 5, then you are not assessed any Social Security or Medicare tax on this code W amount either. The result is that you pay less SS tax and Medicare tax (7.65% of your code W amount). When you make direct contributions to your HSA custodian, you don't get any deductions from SS and Medicare taxes.

So, "employer contribution" just means those contributions that are made through the employer and which are therefore not subject to federal income tax, SS tax, and Medicare tax, as opposed to direct or "personal" contributions. Yes, as you note, the "employer contribution" is made up of amounts that come from the employer (if any) and from the employee through payroll deduction (if any). 

See this reference in IRS Pub 969 on page 7:

"Employer contributions. 

You must reduce the amount you, or any other person, can contribute to your HSA by the amount of any contributions made by your employer that are excludable from your income. This includes amounts contributed to your account by your employer through a cafeteria plan."

If you would like the IRS to change the terminology, I encourage you to write directly to the Department of Treasury, the "owners" of the IRS.

@Tuser7070