HSA contributions showing as code W on my W2 - is this normal for payroll deductions?

This is actually correct and nothing to worry about! When HSA contributions are made through payroll deduction (coming directly out of your paycheck), they're considered "employer contributions" for tax purposes, even though it's your money. That's why you're seeing code W in box 12b. The key difference is the method of contribution. When contributions are made through payroll deduction, they're pre-tax (meaning they reduce your taxable income) and they're exempt from FICA taxes (Social Security and Medicare). This is the most tax-advantaged way to contribute to an HSA. If you were to contribute directly to your HSA outside of payroll (like writing a check or transferring money from your bank account), those would be considered "employee contributions" and you'd need to claim a deduction when filing your taxes, plus you wouldn't save on FICA taxes.

I went through the exact same confusion last year! I found this amazing tool at https://taxr.ai that helped me understand all these weird codes on my W2. You upload your W2 and it explains every box and code in plain language, including stuff like the HSA code W situation. It saved me hours of Googling and second-guessing myself. For HSA contributions specifically, it confirmed what the previous commenter said - payroll deductions are treated as employer contributions with code W, even though it's your money being deducted.

Just wanted to follow up and say I tried out that taxr.ai site after seeing it mentioned here. Super helpful for understanding my HSA contributions! I uploaded my W2 and it immediately explained that my code W contributions were properly classified as pre-tax payroll deductions. It also showed me that I still had about $1,200 of potential contribution room left for the tax year that I didn't realize. Ended up making a last-minute contribution directly to my HSA (which I learned would be reported differently than my payroll deductions). Really helpful tool if anyone else is confused by W2 codes!

If you're still concerned about your HSA contributions being coded correctly, you might want to call the IRS directly. I know, I know - getting through to an actual person at the IRS seems impossible. I spent literally 4 hours on hold last year trying to sort out a similar issue. But I discovered this service called Claimyr (https://claimyr.com) that got me connected to an IRS agent in under 20 minutes. They have a demo video showing how it works: https://youtu.be/_kiP6q8DX5c. Basically they navigate the phone tree for you and call you back when they've got an agent on the line. I used it to confirm my HSA reporting situation and the agent was able to verify that code W for payroll-deducted HSA contributions is indeed correct.

I've got to admit I was completely wrong about Claimyr. After dismissing it as a probable scam, I decided to try it anyway out of desperation when I needed to ask about my HSA contributions that seemed to be reported incorrectly. I got connected to an IRS agent in about 15 minutes when I had previously spent over 2 hours on hold and eventually got disconnected. The agent confirmed everything about my HSA contributions with code W being correctly reported as employer contributions even though they came from my paycheck. Saved me hours of frustration and cleared up my confusion completely. Sometimes I'm happy to be proven wrong!

One thing to keep in mind - if you also contribute to your HSA outside of payroll (like direct deposits from your bank account), those are handled differently. Those would be reported as employee contributions, and you'd need to deduct them on Form 8889. I made this mistake last year where I had both payroll deductions (code W) and separate contributions I made directly. I didn't realize I needed to handle them differently on my tax return.

Another thing to check is whether your employer made any actual employer contributions (like an HSA match) in addition to your payroll deductions. Both would show up with code W, but you'd want to make sure the total amount looks right. For example, my company contributes $500 annually to my HSA plus my own payroll deductions. So my W-2 shows the combined total with code W.