State not calculating right

[bakroenig]

Turbotax had us owing $2900 to our state and I knew the amount should be 0.  I was able to go through the form and put in the right numbers but it bothers me that it wasn't calculating correctly and makes me wonder what else it isn't doing right.

It also didn't add in the amount of our HSA credit on our Federal form so I had to enter that manually as well.

[BMcCalpin · Accepted solution]

I cannot address your state issue since I don't know which state you are referring to.

But your HSA situation is likely due to one of two reasons:

1. If you contributed to your HSA through a payroll deduction program, then your contributions are removed from Wages in boxes 1, 3, and 5 on your W-2.  That's why the deduction for the HSA contributions doesn't show up on your return - because it was removed from Wages before they ever got on your return.

Note that these contributions are added to any employer contributions (IRS requirement) and called the "employer contribution". This is reported on form 8889 but not on the 1040.

The only HSA contributions that get reported on Schedule 1 (1040) are contributions that you made outside of your employer with after-tax dollars.

If you manually entered your contributions made by payroll deduction onto line 12 of Schedule 1 (1040), then you have made a mistake and over-deducted your contribution.

2. The second alternative is that you did not complete the HSA interview (i.e., go all the way through until you return to the Your Tax Breaks screen) - not finishing the HSA interview causes anomalous results.

[Edited 3/17/2020 5:16 pm CDT - updated to 2019]

[bakroenig]

Thank you.  This is a big help.  The HSA is confusing because it isn't the employer contributing since it is our money that is being deducted.  It messes me up every year.  I went all the way through the interview process but now I'm getting a message that says we have contributed too much this year so I understand that now.  Missouri is the state not calculating correctly.  We live in MO but all of our income comes from Illinois and it wasn't giving us credit for the taxes paid to Illinois.  I will print out your answer and keep it with my taxes for next year.  I will get it right one of these years!

[bakroenig]

I have another question as far as Line 25 on page 1 of the 1040.  I have looked back on previous tax returns all done by TT and they all have an amount in Line 25.  If everything contributed to the HSA came out of the paycheck, then are you saying Line 25 should be 0?

[BMcCalpin]

So it looks like you did the same thing every year, putting your payroll deduction amount as a contribution outside of your employer.

I hate to say this but if you did, you may need to amend the returns for 2013, 2014, and 2015, to remove that deduction. It's a bit difficult to predict the result, because it will depend on whether or not you had excess contributions and withdrew them, or let the excess carry over to the next year causing a 6% excise tax, but to prepare you, you may owe tax for each year.

As for Missouri, did you do Illinois first? In most cases (naturally, there are exceptions), you do the non-resident state first so that its tax can carry to your resident state. I know that Illinois tax gets deducted in Missouri (I did it earlier this year, although I don't remember the exact details), so make another pass and see if it works...

[bakroenig]

We had an unusual tax situation last year so I took our taxes to a CPA.  She put the $3,000 contribution on Line 25.  Maybe she misunderstood where it came from.  If she did a Form 8889 she didn't include it with our taxes.  I usually use my free state for MO and do IL myself but I've never had a problem with the MO return not showing the credit before because it came from the information on the W-2.  I'm printing out all of your answers and keeping it for next year so it should go smoother in the future.  I appreciate all of your help!