Pretax HSA contributions are being treated as a distribution!

[ziggy29]

Using TT 2021 (Mac version).  When I enter our HSA contribution for the year (listed as code 'W' in Box 12), that exact amount is being transferred to Schedule 1 as a taxable **distribution** and transferred to the 1040 as such.  Looking at past years, this has never happened before and it is making our estimated tax liability look a lot worse than ever.  

[lstone19]

Actually, TT has always done this but it's temporary. Until you answer the questions in the Deductions & Credits section to tell it that you had a qualifying HDHP, it will treat the contributions as not qualified to be contributed and therefore add it to your taxable income. Just go to the Deductions and Credits section and do the HSA section under Medical.

[Opus 17]

It also used to be that if you entered a W-2 with HSA contributions inbox 12, the program would go right to the qualifying insurance questions before you left the W-2 interview. Entering the code W immediately triggered the HSA questions.  If you bailed out on the W-2 interview after entering the basic numbers, and didn’t finish the rest of the interview steps, you might’ve missed the program trigger for these questions. You can trigger the HSA questions either through the 1099-SA section on the income page or the HSA interview under medical expenses on the deduction page.