HSA account balance - where do you enter it

Tax reporting is required for the Health Savings Account HSA.

IRS Form 8889 must be used to report total deposits and withdrawals each year. (You do not have to itemize to complete this form).

Thanks for the input Peterhawaii but as the W-2 box 12 has the w and the drop down indicates that this is employER contribution and then the program is including that same amount as taxable income on line 21 of the 1040. then that line states that the amount is coming from Form 8889! That form DOES NOT have the $1100 on it at all!

It seems as if I have to ask client if they actually took this money out of the plan to pay for what. Then placing it in the W-2 with code W, inidcating the withdrawal would then put the oneous on the t/p to state where the money was used and its taxability or not? Hmmm. What do you think?

Thanks,

Friendlytaxman44

They don't want the account balance. They just want to know whether or not your distributions were used for qualified medical expenses or not. The w for the contribtuions that are your employer contributions. As long as this amount plus any after tax contributions were below the federal limits then those contributions are not taxable and the individual contributions are deducted off the gross income as an adjustment on page on. The key is knowing whether or not the contributions have exceeded the federal limitations or not...at that point it becomes taxable.

Did you ever find out the answer to your question? I have income flowing through on line 21 also. The contribution was only $500 so the amount is non-taxable but I cannot find a place to fill anything out or check a box to make the $500 not show up as taxable. Please help if you can. Thank you so much and best wishes for smooth tax season.

Go to the Line 3 Smartworksheet of Form 8889. Check the box in "A" if client was eligible all year long or the correct boxes in "B" for the months they were (if not full year). This should solve your problem of income flowing to line 21.