Possible bug in TurboTax Online

[Alex139]

TurboTax Online added all Employer Contribution to HSA as taxable contribution. But the Tax-free employer contribution is 0. There are no any other contributions to HSA personal or spouse.

There is no any possibilities to correct this on my own. So I cannot continue with TurboTax Online.

The token number is 1252378

[Bsch4477]

Does your W-2 have an amount in box 12 code W?

[dmertz]

For an HSA contribution to be treated as nontaxable and not subject to penalty, you must complete the HSA section of TurboTax to establish your eligibility for the HSA contribution.  If you are married filing jointly, make sure that you have associated with the correct spouse the W-2 that shows the code-W amount and the entries in the HSA section.

[Alex139]

> Does your W-2 have an amount in box 12 code W?

Yes, there is a number almost the same as Turbotax put into taxable contribution.

[Mike9241 · Accepted solution]

I9t would only be taxable if you failed too properly complete the HSA section in Turbotax or the answers you gave in the HSA section indicate that you/spouse do not qualify for an HSA. For W-2 purposes both employee and employer matching contributions are reported on the 8889 as employer contributions. we can't see your return so we can't identify the issue, but it seems no one else reported this. for example, if either of you are covered by a health FSA then no HSA contribution is allowed for the period covered by the FSA.

https://fsastore.com/articles/learn-can-i-have-an-fsa-and-an-hsa.html 

you may also want to read PUB 969 which covers qualifications for an HSA

https://www.irs.gov/pub/irs-pdf/p969.pdf 

Basic Turbotax online does not include free support but support for which you would have to pay can see your return to identify the issue. 

5am-5pm Pacific Time (8-8 Eastern) Monday - Friday
https://support.turbotax.intuit.com/contact

800-446-8848

[Alex139]

> For an HSA contribution to be treated as nontaxable and not subject to penalty, you must complete the HSA section of TurboTax to establish your eligibility for the HSA contribution.  If you are married filing jointly, make sure that you have associated with the correct spouse the W-2 that shows the code-W amount and the entries in the HSA section.

Actually, it is not possible to make any changes there in the HSA, MSA Contributions section when W-2 was uploaded. 

In the section HSA, MSA Contributions I can do the following:
1. Checkboxes for HSA accounts. I have one account on my name
2. Box 1 amount (distributions) from 1099-sa, editable field

3. Question about HSA account inheritace,  answer no
4. Page with information from W-2. Number from box 12 of W-2. The number is not editable. But it is correct. Editable field for personal contribution. I have 0 here.

5. The question Did your employer tell you about any other contributions?, answer No

6. A few more questions with answers No.
7. The strange page: You may want to withdraw money from your HSAs. "It looks like you has an excess contribution" with the number from W-2 box 12 code W. "This amount is being taxed an extra 6%" and following options:
7.1 Withdraw by April 14 2024

7.2 Withdraw partially
7.3 No, we are not going to withdraw (selected).
8. Total HSA value, editable field. Also strange question as this must not affect taxes at all.
Then the page with results:
Deduction $0
Total distributions [Number from 1099-sa]
Taxable distributions $0

Taxable earnings on excess contributions $0
Taxable employer contributions [Number from W-2 box 12 code W]
Tax-free employer contributions $0
Excess employer contributions withdrawn $0

I did not file taxes with TurboTax last year.

[Alex139]

Hi @Mike9241. I didn't have FSA.

Is it possible that the bug is on the IRS side in the 8889 for the 2022? There is 0 for HSA contribution. I paid no attention on the line text when focused on the line counting.

Thank you very much @Mike9241. You saved TT reputation and helped me a lot.

[dmertz]

Between #5 and #7 you should have been able to indicate the type of qualifying HDHP coverage that you had each month, Self-only, Family or None.  Upon competing this TurboTax indicates the maximum permissible contribution.  With no qualifying HDHP coverage (or with disqualifying coverage such as Medicare) for a particular month, you are not eligible to contribute the pro-rated amount for that month.

[Mike9241]

Don't know which desktop version you are using for 2022 because online is no longer available for that year. As a side note you won't be able to e-file 2022. It will have to be mailed 

If there is an amount coded 12W on a 2022 w-2s that should flow to line 9 of the taxpayer's 8889

it's difficult to analyze your issue because I can't see the return or answers you gave in the HSA section.

on the Turbotax worksheet line 1 either self-only (HDHP) or Family (HDHP) must be checked

there should be nothing on line2 unless HSA contributions were made directly to the HSA account - no contributions through the employer are reported on line 2. On line 3 the type of HDHP you had for each month must be checked - none - self-only or family. if you/spouse are covered by an FSA none for each month covered by the FSA should be checked. If the taxpayer is covered by Medicare none should be checked for each month so covered.   

look at the 8889 in Turbotax. Line 8 should reflect the amount allowable. Line 9 should show the amount from line 12w of the w-2

line 12 on the 8889would show the excess

this excess if ny shows on schedule 1, line 8f for 2022

you do not get a tax deduction for the allowable amount because box 1 wages of the W-2 is reduced by the HSA contributions made by the taxpayer (but not the employer) 

if you are still having issues go through the HSA section again to check your answers and make sure that if it is the spouse that has the HSA that the spouse box on the w-2 is checked.