HSA Incorrectly transferring contributions as employer contributions

Forum|Forum|2 years ago
February 7, 2024
2 replies
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California HSA taxing 100% of W-2 Item 12 coded "W" however this is not employer contribution, it is mine and therefore should not be taxable.

TurboTax Business Windows

Best answer by dmertz

Any amount contributed through your employer is considered to be an employer contribution because your employer excludes the amount from your taxable wages reported in box 1. Because it was excluded from your federal AGI, it must be added back to your income on your California tax return.

BillM223

No, TurboTax is doing the California return correctly.

California does not allow the deduction of any HSA contributions, whether from you or your employer.

Since the code W amount in box 12 of your W-2 was removed from Wages in box 1 before your W-2 was printed, this same amount has to be added back to California income when the CA return is started.

Both your employer's contributions and your contributions through payroll deduction are collectively called the "employer contribution" because they are treated the same way on your tax return.

This is not sloppiness on the part of TurboTax, but the way that the IRS uses the terminology.

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