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The instructions for Schedule I state "However, an adjustment may be required if you withdrew from the account in 2022, you had an HSA prior to 2011 for which you were not allowed a deduction for Wisconsin for contributions to that account, and you reported the earnings on the account as income on your Wisconsin return."
So, if I remember, you did not even have an HSA prior to 2011, right? If you had an HSA prior to 2011, then in Wisconsin, you had to treat this as an investment account, and report the earnings on the account. Accounting for those earnings is part of the adjustments on the worksheet on page 5 in the instructions.
But if you never had any earnings on your HSA that you reported on your federal return (which you normally would not have), you don't need any adjustment more than the "Adjustments for 2011 Contributions" screen, so just remove (set to blank) the previous pre-filled description in "Other Adjustments to Income".
Besides, if you left the federal and state adjustments as 0 and 0, the difference is zero, which would not have adjusted anything, so no point in having it there.
Your statement is puzzling because Wisconsin Schedule I is available on all platforms: Online and CD/Download on Windows and Mac.
Is it possible that you are wanting to file a Nonresident & Part-Year Resident Income Tax return?
Hi Bill, thank you for replying to my question. No, I'm not looking to file for either of those situations.
Ah, I think I found it. Schedule I has an interaction with old HSA users. The form may have already been released but an issue cropped up after the release. Thus the message about waiting for a new update for the small percentage of Wisconsin users to whom this would apply.
Here is background for HSAs and Wisconsin.
Line 2a on "2022 Wisconsin Schedule I Instructions" says
"(a) Federal – Certain individuals may establish health savings accounts (HSAs) under sec. 223, IRC. A deduction is allowed for contributions to the account. Amounts contributed by an employer to an employee’s account are excluded from the employee’s gross income. (Section 307 of Public Law 109-432). (b) Wisconsin – The federal provisions relating to HSAs apply for Wisconsin for 2011-2022. However, an adjustment may be required if you withdrew from the account in 2022, you had an HSA prior to 2011 for which you were not allowed a deduction for Wisconsin for contributions to that account, and you reported the earnings on the account as income on your Wisconsin return. If this is the case, complete the worksheet on the next page."
This sounds new compared to previous years, which would explain the message you are receiving.
The following I used every year up to 2021 to explain that screen in the Wisconsin interview that confused Wisconsin taxpayers:
"If you made contributions to an HSA prior to 2011, Wisconsin did not permit the deduction of such contributions. However, subsequent to 2010, Wisconsin passed a law that enabled you to make adjustments to your current income in order to simulate taking the HSA contributions prior to 2010.
NOTE: this applies ONLY if you were in Wisconsin prior to 2011, filing a state return, and contributing to an HSA at the federal level. If not, leave the section blank and continue.
In the Wisconsin interview (where I assume you have the question), the first line asks you for the value of your HSA in 2010, less distributions made in 2011, 2012, 2013, and 2014.
The second line asks for your HSA distributions in 2022. Note that this is all expenses (even perhaps for non-medical ones).
The third line asks for which of the 2022 distributions were for qualified medical expenses...BUT you are expected to enter no large than the amount in the first line - that is, it is really asking for "what part of the remaining pre-2011 HSA value did you distribute in 2022 for qualified medical expenses?" Viewed this way, because you are charging off some of the 2022 distributions against it the remaining pre-2011 HSA value, it's clear that you can't use more than the remaining pre-2011 HSA amount in 2022 for this purpose.
Just limit the third entry to be no larger than the first entry, and the return will be correct."
Thank you for the follow-up.
Here is what I entered for the section in question after reading your reply:
Since I did not have an HSA prior to 2011, I entered zero on line one.
I entered my total distributions from my HSA in 2022 on line two.
I had to enter zero on line three because it can't be any larger than line one.
This didn't fix the original issue I was having and it also created a new one. The new issue comes from Schedule I and basically states that my 2022 distribution from the HSA can't be any larger than the balance of the HSA prior to 12/31/10 less the amounts in 2011-2021. Entering zero into line two of my 2022 distributions fixes the new issue. This section is very confusing.
I'm wondering if my original issue is coming from the "Other Adjustments to Income" section which comes up under State which is new to me this year. I have HSA for High Deductible Health Plans entered in with zero for both the Federal and State amounts. I'm also confused with this section. The "Learn More" option on this page doesn't mention anything about HSAs.
Let me look at this.
Please let me know if you have an update today. Thank you!
Hi Bill,
Can you please give me an update on the issues I'm having? I haven't heard from you since Wednesday.
Sorry, I have been under the weather.
It appears to me that this section is trying to ascertain what amount of your HSA dollars from before 2011 have been spent in the subsequent years. The screen (which was updated this year because of changes to Schedule I) probably could have been done better. That is, if you did not have an HSA prior to 2011, this entire calculation just doesn't apply to you and you should be able to skip it. (this would result in no adjustment to Schedule I, which would seem to me to be correct).
But the way these questions are phrased is confused. I think that perhaps the second question should be "HSA distributions in 2022 THAT USED DOLLARS IN LINE 1" would be more clear. In your case, of course, since there were no HSA dollars prior to 2011, you could not have distributed any such dollars in 2022.
And of course, "the amount of 2022 distribution used for medical expenses" is irrelevant, if the amount for the second line is zero.
So I would answer
1. 0 (zero)
2. 0 (zero)
3. 0 (zero)
This has zero effect on your state's taxable income, which seems to be correct, because since you had no HSA prior to 2011, there does not need to be an adjustment.
Make sense?
Thank you for your reply, I hope you feel better soon.
Everything makes sense, I entered everything in as zero for the pre-2011 contributions as you said so now the new issue which came up is gone leaving only the original issue from Schedule I which comes up during the review process -
| Schedule I: _ Your return includes a Health Savings Account adjustment that requires a calculation on the Wisconsin Schedule I which has not been finalized. Do not file this return until this calculation is finalized in the upcoming release of TurboTax/Wisconsin. |
Could it have anything to do with the Wisconsin adjustments page?
"Could it have anything to do with the Wisconsin adjustments page?"
The answer is probably YES, but I have not yet triggered this message. I will look at it tomorrow.
Following as I have the same issue under turbotax premier for my WI return. I can't file it as it continues to error that schedule I has not been finalize and that the calculation is being finalized in the upcoming release of Turbo Tax/Wis. I also have all zeros for the HSA information as while I have an HSA now, I did not in 2010,2011 etc.
I tried uninstalling turbotax this morning and reinstalling but that didn't make a difference.
While I look at this, please let me know what version of TurboTax you are using and whether it is Online, Windows, or Mac. Thanks.
Hi Bill, I'm using the online version.
CMOLDE, may I assume that you are using the CD/download product?
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