Why are my HSA Contributions being taxed?

I am filling out my information in Turbo Tax and when I add how much I am contributing to my Health Savings Account, it reduces my tax refund. Does this mean I am being taxed on this money? I thought HSA contributions were supposed to be tax protected? Any advice would be appreciated.

2010-01-30T16:06:06Z

Thank you all for your quick responses - the form did adjust later when I completed the 8889. TurboTax is a little misleading and suggests I am being taxed on this when is reduces my refund after filling in 12(c).

smithsmallbiz12010-01-30T15:30:24Z

Favorite Answer

Be sure that you input the amount of unreimbursed medical expenses you paid, this is on Form 8889 part II line 15.. Usually it is the same amount you contributed.

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Anonymous2010-01-30T15:30:51Z

Because Turbotax posts the projected refund too early and you are looking at it.

The 8889 form is later in the interview and when that's done, your refund will go back up.

Part I of the 8889 comes from your W-2--the box 12, code W has to be reconciled to show it's not over the annual amount you are allowed to contribute.

Part II is for disbursements which you haven't entered yet from the 1099-SA.

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