FORM 8889 HSA

[mike9]

55 year old client had employer contributions of $7,000 ( BOX 12 CODE W)

Form 8889 is calculating an additional $1,000 as HSA deduction even though the client did not make the additional contribution as a catchup.

Is this right?

Any help would be appreciated

[Just-Lisa-Now- · Accepted solution]

Are you sure its giving a $1000 deduction?   When I put your scenario into a dummy file, I see that $1000 end up on Line 12 of the 8889, but it doesnt give any extra deduction anywhere.

[mike9]

Thanks for responding Lisa

I see the problem I entered $7K on Line 2...oops my bad--hope I didn't waste your time ...

Thanks so much

[Just-Lisa-Now-]

Many people do the same thing!  The form is confusing...you'd only enter something on Line 2 if the taxpayer made contributions outside of payroll...doesn't happen very often, but it can!

Youre welcome!

[TaxPandaCPA]

Hi Lisa, 

I have the same issue. My cx's box# 12 has W code 3555, I entered all the forms in Proconnect and Turbotax, Turbotax recognizes that $ 3555 employer HSA contribution as taxable income, Proconnect did not. Is that mornal? Thanks!

[rjmlm]

I have the same issue. My client contributed $7,100 to their HSA and ProSeries added the additional $1,000 deduction. They got a letter from the IRS yesterday saying the deduction was calculated incorrectly and should only be $7,100. They also adjusted the refund amount. My client is not happy.

[mike9]

Yes the form is confusing . It took me several tries to get it right. Pro Series occasionally makes some programming errors ( example 1120 Contribution 10% vs 25% rule change) but most are "operator issues"  🙂

[BobKamman]

I just had to redo a return (fortunately before it was filed) to show direct contributions in addition to employer funding.  Clients had more medical expenses than they had money in the account, and were smart enough to know that adding funds and then using them to pay the bills would save taxes.  They didn't communicate what happened as well as they needed to help me spot something unusual, but it got fixed.  Turned out they had gone over the $7,100 limit, so they had to call the HSA bank and recharacterize 2020 deposits to 2021.