Hsa Distributions

[Chief]

I have a questions concerning these distributions. On a W2 I have entered in box12 a code W for $1500 which is a HSA distributions not included in the income. The software then generates a HSA distributions for1040 line 21 which then increases the total income of the client. Is this correct? Would appreciate your insight. I've chcked Pub 17 and the TaxBook but can't figure this out.

[snowshine]

Code W in box 12 is for employer contributions into an HSA. If you dont fill out the 8889 then the program will conclude that the TP is not qualified for the HSA and make it taxable. One doubts that this is actually the case.

[AJsTax]

Code W in Box 12

is for employer contributions and Employee before tax contributions. Many do not do this correctly. Yes, you have to do the form to indicate they were eligible for the plan, the type of plan (single or family) and also if any distributions were made during the year.

[Chief]

Hsa

What prompted my question in the first place was the result of entering many of my 09 returns into TaxAct software. I had used TaxWise thruTRX for the past two years. I had used Taxwise many years ago and thought the TRX deal would be good. They have discontinued it after being dropped by CCH. I did not want to continue with them since I would never know what software they would be offering from year to year. The HSA employer provided stipend did not generate a form 8889in Taxwise.. The form is generated by Tax Act.
When I figured out how to complete the form the amount reported was not taxable, but I had to complete the form before it was reported correctly.
I found out also that TaxAct has a better Simplied Pension Plan for figuring the nontaxable portion of a pension.
The fact that TaxAct is forms oriented program makes it simpler to use than the menu driven programs.
I want to thank you all for your responses.