When I enter in just over $4,000 in box 12 code W, my federal return and state returns go down substantially (Federal decreases $1,570 and State decreases $204). Why do the refunds decrease?
Thanks for any help that you can provide.
The amount with code "W" in box 12 in your W-2 is the sum of the contributions your employer made and that you made through a payroll deduction scheme.
However, the IRS, by default, assumes that these contributions are taxable until you complete the form 8889.
In TurboTax Deluxe, you enter the data to complete form 8889 by going to Federal Taxes->Deductions & Credits->Medical->HSA, MSA Contributions and entering the interview
Be sure that you complete the interview. This is because the IRS, by default, also assumes that if you don't enter the amount of your qualified medical expenses (which is one of the last questions in the interview), that the amount you had distributed is all taxable.
I have the same issue, but the interview never asks me about qualified expenses. I'm still being docked for this.
I'm having the same issue. Does anyone know how to fix this? Also, is box W my contributions or my employers contributions, or mine and my employer's contributions together? My employer doesn't contribute anything to my HSA.
Box W is the amount of contributions made through your employment. The IRS does not care who contributed them, you, your employer, or both.
As Bill stated, if you finish with the W-2 and the interview did not ask if you used any HSA funds,
Go back to the TAX HOME page or Click on FEDERAL
Click on Deductions & Credits
Scroll down to "Medical" (First click "All tax breaks" if needed)
Click "Show more"
Scroll down to "HSA,MSA Contributions" and click Start
Answer the interview questions
I tried that multiple times but it does not seem to address the issue, not entirely sure. I also noticed that my deductions when itemized would be more than the standard deduction if the HSA contribution is considered as a deduction like it was the last year.
I also see that in the W-2 (my wife's), the HSA contribution has not been deducted from her taxable wages which is Box 1 on the W-2. Perhaps that is the issue?
Appreciate any insights anyone could provide.
In order to remove the additional income attributable to "Code W" which is the health savings plan indicator, you need to answer the questions regarding the HDHP (High Deductible Health Plan).
Please follow these steps after you sign into your account:
In response to this, I am seeing a screen that is asking me to input the year end HSA Value found on form 5329-s.
Is this another form that we should be receiving from my wife's employer that will show this number?
The fair market value of an HSA is found in box 5 of form 5498-SA, which the HSA custodian mails to you.
The problem is that the 5498-SA is not required to be mailed to you until May, so your wife may not have gotten it yet (HSA custodians are all over the place on when they mail this form).
The solution, then, is to just call your HSA custodian and ask them. Actually, the form or the equivalent information may be available at your HSA custodian's website.
Thank you I will look into that!
If I entered code W in Box 12 based on the w-2 information. Why then is it asking for Form 5329-S?
Code W in Box 12 of your W2 indicates that you have an employer-sponsored Health Savings Account and that there was money deposited into your HSA through the payroll system at work.
Code W opens up Form 8889, Health Savings Accounts, on your tax return. You may also receive a Form 1099SA if you spent any of the money in your HSA. If you are Married Filing Jointly the program will ask questions about both you and your spouse, even if the spouse is not involved with the HSA.
Thank you, So if she has not yet received her 1099-sa she should contact her employer to get it then?
Form 5329-S is the spouse's copy of form 5329, that is, each spouse can have their own 5329.
Form 5329 is used to calculate the penalty you owe for carrying over excess HSA contributions instead of withdrawing them before April 15th.
Form 1099-SA is used to report money that you spent out of your HSA, as Dean noted above.
However, if you did not spend any money out of the HSA, then you won't receive this form.
Note that each of you can have HSAs, so the 1099-SA is issued to a single person, not the couple.
Also note that the 1099-SA comes from the HSA custodian, not from your employer, who has no idea of what you are doing with your HSA. Your employer's only interaction with your HSA is to put money into it. After that, everything is in the hands of the HSA custodian.
TurboTax is importing Box 12 code W directly into line 9 of 8889. Earlier comments in this thread say that Box 12 code W indicates *any* contributions to an HSA, including both employer and employee contributions. However, when this number is entered into line 9, it indicates that the full $7,000 in that box that was added to my HSA is comprised of employer contributions, when actually it was $1,500 from my employer and $5,500 from me. As a result, my $5,500 contribution is not being subtracted from my taxable income.
To confuse things further, my 2017 and 2018 W-2s only list the $1,500 employer contribution. If the comments here are correct that Box 12 code W should include both employer and employee contributions, then the 2019 W-2 is correct, but being misinterpreted by TurboTax, while the 2017-2018 W-2s were incorrect but resulting in the correct answer. If I manually edit my W-2 to reduce it from $7,000 to $1,500, I get the answer I expect. Help?
box 12 code w from IRS instructions
W—Employer contributions (including amounts the employee elected to contribute using a section 125 (cafeteria) plan) to your health savings account. Report on Form 8889, Health Savings Accounts (HSAs).
so did you put in $5,500 thru your company's 125 plan? if so your taxable wages have been reduced so in effect you got the deduction. questions - check with you employer
I have read through this problem and tried all of the hints and tips mentioned. Ensuring that I did answer yes I was covered by HDHP during 2019...
I am eligible for $4500 HSA deduction
I contributed $3375 for 9 months of the year before I had employment
I had the remaining $1125 withheld from my W2 paycheck by my new employer.
Form 8889 is not including the W2 Box W amount of $1125. It is only allowing the $3375 that I deposited into HSA account prior to employer based W2 withholding. So I am missing out on $1125 income reduction.
Hopefully this is enough information for you to track the bug down. I am unable to file my taxes correctly using Turbo Tax as I am denied the remaining $1125 deduction.
I did not find this comment to be correct. W2 Wage amount is not reduced for HSA.
"I contributed $3375 for 9 months of the year before I had employment" - what does this mean? Were you covered by an HDHP policy for those 9 months? Did you make direct contributions to your HSA not through an employer?
If you contributed $3,375 directly to the HSA (not through an employer), then this amount should appear on line 2 of the 8889. Any amounts (like the $1,125) through the employer should appear on line 9 of the 8889.
Most taxpayers do not realize that contributions made through the employer are not explicit deductions on line 12 of Schedule 1 (1040), but are instead removed from Wages in boxes 1, 3, and 5 before the W-2 is printed. The reason that contributions made through the employer are not reported on line 12 of Schedule 1 (1040) is because they were never in your Wages in the first place.
"Hopefully this is enough information for you to track the bug down." - there is no bug in TurboTax. Ask your employer if they removed the $1,125 from Wages when they printed your W-2. If so, then your W-2 is correct and your return is correct.
If your employer did not remove the $1,125 from Wages in boxes 1, 3, and 5 on your W-2, then you deserve a corrected W-2 because your employer did not complete the W-2 correctly - please show them the Instructions for the W-2 for code W on page 20.
[Edited 4/21/2020 6:22 pm CDT - corrected the link to the W-2 Instructions]
"However, when this number is entered into line 9, it indicates that the full $7,000 in that box that was added to my HSA is comprised of employer contributions, when actually it was $1,500 from my employer and $5,500 from me."
The code W amount should be on line 9, because the "employer contribution" is the sum of what your employer contributed PLUS what you contributed by means of payroll deduction. It's counter-intuitive, but that's the way the IRS uses the terminology.
As noted elsewhere, your $5,500 payroll deduction was removed from Wages in boxes 1, 3, and 5 before your W-2 was even printed, so of course you don't see a deduction for the $5,500, because it was never in your income in the first place.
"To confuse things further, my 2017 and 2018 W-2s only list the $1,500 employer contribution. If the comments here are correct that Box 12 code W should include both employer and employee contributions, then the 2019 W-2 is correct, but being misinterpreted by TurboTax, while the 2017-2018 W-2s were incorrect but resulting in the correct answer."
If you had payroll contributions in 2017 and 2018 which were not reported with the code W amount on your W-2, then, yes, your W-2s in those years were wrong.
The way to fix this would be to amend your 2017 and 2018 returns and look for the screen in the HSA interview that asks if your employer reported any other contributions to your HSA. Answer "yes" then place the amount of your payroll deduction on the line "HSA contributions not reported on your W-2".
Thanks for pointing me to the W2 instructions. That did the trick! I had received two W2s from employer - one with the $1125 and one without. I will be interested to see if 2020 when my total amount is withheld from my paycheck how it looks on the 8889. I bet this item is one of your top items for questions.
Thank you!
I am having the exact same issue. Is Turbo Tax not asking the correct questions to allow for the employee contributions to be tax free while the employer contributions are? I am going to call them today.
Code W in box 12 of your W-2 means:
You and/or your employer likely made contributions to your health savings account (HSA).
You likely had a IRS form 8889 generated in your tax return. This form is used to report HSA contributions, distributions and withdrawals to the IRS.
You will want to answer the questions about your HSA transactions. It sounds like the default answers or the answers that you have entered have made the HSA transactions taxable income and lowered your Federal and state tax refund balances.
Follow these directions to correctly report HSA deductions.
See also this and this TurboTax Help.
Publication 969 says. "Contributions made by your employer aren’t included in your income."
It goes on to say, "Report all contributions to your HSA on Form 8889 and file it with your Form 1040."
This wording leads me to believe that you would not actually report it anywhere on Form 1040 itself, but that Form 8889 serves as the reporting vehicle. To me, then, the idea that Intuit would count it as "taxable" by default seems flawed and means that anyone who doesn't do that interview ends up overpaying the IRS. This seems ... bad. Maybe I'm missing something?
https://www.irs.gov/publications/p969