Family HSA contributions

[lbergmark]

I want to contribute the $6750 to my HSA as it covers myself and my children.  Currently my 2017 form states that I put 2400 into it in 2017.  When I try to put 6750-2400 into it, it says that I am funding it in excess (but it will let me max it out as an individual:  3400-2400).  How do I make turbo tax realize that this is a family HSA and not an individual one so that I can contribute the maximum amount for 2017?

[LindaA]

Revisit the HSA interview and indicate that you were covered by a family plan. This topic comes up a few screens after you enter your HSA contributions. When TurboTax prompts, "Were you covered by a High Deductible Health Plan (HDHP) in 2017?", be sure to select "Yes" and then check "I was covered by a Family plan every month of the year."

[fuzzyatom]

'"be sure to select "Yes" and then check "I was covered by a Family plan every month of the year."'

Even after doing this it still thinks that i have exceeded contribution limit.  There isn't anywhere I have found to indicate that it is a family HSA.  Please help!

[DMarkM1]

1.  "Edit"  HSA section

2.  Click through the interview questions being sure that the HSA box for you and/or spouse are checked

3.  Eventually you will get to page titled "Was XXXX covered by ...HDHP in 2019?" 

4.  Be sure to answer "Yes"

5.  That will prompt a question about whether plan was "family, self-only, or different plan types" 

6.  Select "Family"

Sometimes the issue is double entry of the contribution amount.  To check:

1.  "Edit"  HSA section

2.  Click through the interview questions being sure that the HSA box for you is checked

3.  When you get to page titled "Let's enter XXX HSA contributions", be sure not to double enter the contributions. 

If the contributions are on your W2 and entered already, you should enter zero (0) in the box for "any contributions you made".

You will get the same questions for your spouse, if applicable.

[bellis777]

So, I'm running into a similar situation. I added $4600.05 from my W2 (box 12c, code W), which is a combination of contributions from both me ($4000) and my company ($600). [Yes, I have a family High Deductible plan.] You are recommending I type zero when I get to the HSA deduction section, but then why would it/should it display as zero when I would expect it to display $4000 here? Am I already receiving a deduction based on what I entered from my W2? Also, the Code W text seems a bit misleading because it says "Employer contributions."

I'm just double-checking. Please advise. Thanks!

[DMarkM1]

That box 12 code W excludes the income from your taxable W2 income. It will only show up in the "Employer Contribution" box because it is from your W2. As long as that box includes all that you have contributed (or was contributed for you), then you do not need to add amount in the other contribution box in the HSA interview.      

[bellis777]

Hey there, so I received the below text when doing my CA taxes. Just confirming that the feedback you provided about the Federal return is still applicable for CA. I ask because of the "by your employer" language when they contributed very little.

Thanks once again.

- - - - -

About Your HSA Contributions

We've calculated an addition to your California income in the amount of $4600 for contributions made to your health saving account (HSA) by your employer.

This is the portion of the contribution that was not included in income on your federal return. California does not allow you to exclude employer contributions from income.

The amount can generally be found on Form W-2, Box 12, but could also be reported separately.

[BillM223]

As you know, California does not allow HSA contributions to be deducted.

As the others noted above, HSA contributions made by the employer or by the employee by means of payroll deduction, are removed from Wages in boxes 1, 3, and 5 before the W-2 is printed. This means that when the Wages are brought from the federal return to the state return, that the HSA deduction is buried inside it.

Therefore, TurboTax adds this amount (which is the code W amount in box 12 on the W-2) back to California state income, to eliminate the deduction on the California return.

As for contributions made directly to the HSA (not through the employer), they are reported on the 1040 on line 12 on Schedule 1 (1040). This amount is just not subtracted from CA income to make the state AGI, unlike the federal return where it is subtracted (line 12, Sch 1).

[PAB5150]

Both my wife and I had HSA accounts.  Mine covered just me, hers covered her and her adult (23) son.  She has a family plan and contributed just under the $7k limit.  Even though she is coded family plan, turbo tax does not seem to recognize that her son is covered and therefore is assessing the penalty for excess contribution.  I can't find a place to indicate that the adult child is part of the family plan.  Help!

[BillM223]

"I can't find a place to indicate that the adult child is part of the family plan. "

There is no such place, because she doesn't need to indicate that her son is on her plan. It is sufficient to indicate that she has Family coverage in her HDHP.

Since I can't see your return, I can't say for sure, but I suspect what happened is that she contributed her $7,000 for her Family plan, and you contributed $3,500 for your Self plan, and you two are getting an excess contribution message for $3,500. This is not her overcontribution, it's yours.

The problem - and this is a common misunderstanding - is that a married couple with one spouse under Family HDHP coverage shares the Family coverage. That is, you don't get to contribute to your HSA independently of your spouse; instead, you two share this $7,000 contribution limit, split any way you like.

As the IRS says in Pub 969, if either spouse has Family HDHP coverage, then both spouses are considered to have Family coverage, and they share the Family contribution limit.

To fix this situation, you should do the following:

1. Tell TurboTax that you will withdraw the excess by April 15th (I hope there is enough cash to do it).

2. TurboTax will ask you who made the excess contribution - you get to pick who pays, or if you don't have enough cash in one HSA, you can withdraw parts of the excess from both HSAs.

3. Call the HSA custodian(s) before April 15th and tell them that you want to request a "withdrawal of excess contributions" (use this exact phrase).

4. The amount of the excess has been automatically added to Other Income on Schedule 1 (1040), but this is OK, because the HSA custodian is sending you a check for that amount.

5. Early next year, you will receive a 1099-SA reporting the earnings on the excess while it was in your HSA; the distribution code will be '2'. Enter that on your 2020 tax return, and the issue will be taken care of.

If this is not your situation, then come back and tell us.

[PAB5150]

Seems like your answer is confirmed by something else I just read.  That is confusing (and wrong!)  Discourages savers.  Thanks for the response.  I guess I will have to draw some out.