W2 Box 12 Code W and Form 8889 how to report my HSA contributions.

[taxesohmy2017]

I have a question. I contribute to a HSA account through my employer in 2022.  Each week there a payroll deduction for my HSA contributions to my account.  My employer also contributes a small amount as well.  On my W2, box 12 shows code W and the amount is $1500.   I went through my pay stubs and my HSA contributions for the year was $1000 and my employers HSA contribution was $500.00.  I also received Form 5498-SA and line 2 has the total amount of $1500.00 for total amount contributed in 2022.

My question is would I put my $1000 on line 2 on Form 8889 and on line 9 for employers portion would be $500.00 so I can get the possible HSA tax deduction on my tax return.

I also had a HSA distribution in 2022 for $1000 but that all went medical, so I know that amount is not taxable income.

thank you in advance for your assistance.

[DawnC]

Don't enter any additional contributions in the HSA section.   The code W amount (you and your employer's contributions)  will be transferred to form 8889 automatically when you enter your W-2.   That money is already tax-free.   Don't enter anything from Form 5498; keep that with your tax records.    And yes, when you enter your distribution and indicate it was all used for medical expenses, it will not be taxed either.  

[taxesohmy2017]

okay. so since it's already tax free from my payroll check, I don't get the HSA deduction on my tax return, is that correct?

And if I contributed to an HSA account that wasn't tax free, than my amount would have gone on line 2 on Form 8889?

Trying to understand how some individuals qualify for HSA deductions on their tax returns while others don't.

I certainly don't want to take any additional deductions prematurely.

thank you

[AnnetteB6]

That is correct.  Since the Health Savings Account (HSA) was funded through payroll deductions using tax-free money, it is not deducted on your tax return.  

If you had made any additional contributions to the HSA account on your own with after-tax money, then that amount would be entered into your return as an additional contribution and it would be reported on Form 8889 line 2 and also Form 1040 Schedule 1 line 13.  

Be aware that if you have not already reached your maximum HSA contribution limit that you can make a contribution to the account for 2022 before the tax due date and take the deduction on your 2022 return.

@taxesohmy2017 

[taxesohmy2017]

thank you for replying.  Sort of confusing. But now I totally understand.  I know some of my co workers who have had their tax returns prepared by a CPA or a tax preparer and had taken the HSA deduction.  Their tax preparer says its okay.   And they are adding in by their payroll only like I am.

Anyways... not my business what they do.  I just want to do what is right.

I rather take the extra steps to read the instructions and ask questions. 

Thanks again.