W2 12c W value different from actual HSA contributions

[usmanajmal]

Hi, 

My W2 shows 3712.50 in Box 12c Code W.

My total HSA contribution has been $7200. Out of which my employer contributed $1500. 

$7200 - $1500 = $5700 has been the employee (myself) contribution. Out of $5700, some amount was deducted outside of my paycheck.

When I uploaded my W2 to TurboTax, it did not read any numbers from the Box 12. So I entered those myself. While entering the Box 12c Code W, do I enter what my W2 shows which is 3712.5 or should I enter the full contribution i.e. 7200?

Also, do I have to make my employer send me a corrected W2 or it doesn't matter?

[usmanajmal]

Also, later when I am filling up the HSA part on TurboTax, it mentions:

2021 employer and payroll contributions = 3712.5
(Box 12 of your W-2)

and then asks: 

Any contributions you personally made
(not through your employer)"

Now, there should I enter:

1. the amount I personally contributed outside of what was deducted of my payslip? or
2. the full amount I contributed over last year which is $5700, or
3. should I mention $3487.5. As the employer contribution is mentioned as $3712.5, therefore, $7200 - $3712.5 = $3487.5

[RaifH · Accepted solution]

Enter the contributions you made outside of what was deducted from your payslip. This amount should be $7,200-3,712.50 or $3,487.50.

You have already received the tax benefit of the remaining contributions you made from your paychecks. That is because this income was not added to your taxable income for federal income tax, or social security or Medicare taxes. You will now get to deduct your remaining contribution, the $3,487.50, from your taxable income. That means that contribution will also reduce your taxable federal income. 

You do not need a corrected W-2. Your employer has reported it correctly if the remaining $3,487.50 was made out of your own pocket. Code W on your W-2 includes both employer contributions and contributions you have made of pre-tax income. 

Once you report it this way in TurboTax, assuming you had family HDHP coverage for the entire year and had no over-contributions in prior years, you will not be assessed an over-contribution penalty in 2021. 

[usmanajmal]

Thank you for the detailed reply.