HSA contribuations

[BillM223]

Did you have a question about HSA contributions?

Please give us details, since we in the Community cannot see your tax return nor the screen you are on.

[sreiley]

My company reports their contribution and my contribution to my HSA on my W2 with code W.  Unfortunately, the software seems to think that 100% of what is reported there is employer contribution on the tax form 8889-T.  I had this problem for the last several years.  I have to do an override to show that my employer only paid a portion of the number reported and then I get an error when the system goes thru and does the check.  Something is messed up with the software and it does not allow you to change the amount that was actually the Employer Paid vs what I paid that is reported on my W-2.  Please fix the software.

[VictoriaD75]

It is common practice that employers enter both the employee payroll contribution and employer contributions with code W in box 12.

The most common error I see when entering HSA contributions are double reporting. Typically, these payroll contributions are reported on your W-2 in box 12 with code W. If that is the case, no other contribution needs to be reported in the software.

Under the Deductions & Credits menu, confirm the following:

• Expand the menu for Medical
• Click Start/Revisit next to HSA, MSA Contributions
• Confirm the account ownership and click Continue
• Continue in through the screens until you reach Let's enter your HSA contributions
• Stop here. If all of your contributions were through payroll deductions and reported on your W2, do not enter anything on this screen. If that is the case, either leave the box empty or type $0 in the box next to Any contributions you personally made

[sreiley]

That does not help.  That puts me right back where I was with it looking like all of the contribution was from my employer and not a penny was from me.  I paid the majority of it and the employer only contributed $1000.  There is no way to fix it in the software that I can see and basically gives me $0 credit for the money I invested in my HSA, even if it was done as part of a deduction on a paycheck by paycheck basis.  That doesn't change the fact that it was me making the investment and not the employer.  Our company will match $1000 for whatever we invest in our HSA every year.  A nice benefit but not if your software is going to screw it up every year.  The software has been messed up like this for years now and I have to keep going in and doing an override to clearly show that only $1000 was from the Employer and the rest was from me.

You guys need to find a way to have the input change triggered when the W-2 is entered.  I am not going to loose my benefit and will have to do the over-ride to show what part was paid by the employer and what part was my contribution.  Leaving it alone, it shows I did NOTHING and the employer basically paid me an additional bunch of money....which is not true.

Last year, your software actually triggered a potential finding at this point in the final review and allowed me to go in and make the change.  That is not happening this year.  Again, this should be caught at the time that we enter the W-2 and not way at the end of the run.

[sreiley]

I found my mistake.  Forgot about the "cafeteria plan" aspect of this.  Sorry for the noise.  Just not very clear how it was being treated on the tax form.

Ignore my last post and I appreciate the input.  I went and read up a bit more on how this was being handled and need to watch out for the "double dip" since it is taken out Pre-Tax on my paycheck.

You set me straight...I just didn't like the answer.  🙂

[BillM223]

@sreiley

I agree that how HSAs are done in the Tax Code can be quite confusing. Even worse, the best benefit of HSA contributions made through your employer also makes it impossible for you to see it.

That is, when you make a 401(k) contribution (code D in box 12), that amount is removed from Wages in box 1, but not from box 3 and 5, so it's easy to see how the 401(k) contribution is a tax benefit.

But the HSA contributions made through the employer - whether theirs or yours - are removed from Wages in all three boxes - so you actually can't tell from looking at the W-2 that any deduction was made at all. But you have now saved an additional 7.65% because you not only didn't pay federal income tax on the HSA contributions, but also no Social Security or Medicare taxes.

And since there is an actual line for HSA deductions - but only for contributions not made through the employer - it is very easy not to realize what's happening.

TurboTax is a DIY product, so there is a limit to how much explaining of the vagaries of the Tax Code can be done, especially, as you saw, the difficulty in getting taxpayers to understand that the IRS uses "employer contribution" to describe both contributions from the employer and from you by means of payroll deduction - and we have to follow that terminology.

I am glad that you've got it now.