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My return states that I overpaid on my HSA and I have not. What do I do to fix this?

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Level 13

My return states that I overpaid on my HSA and I have not. What do I do to fix this?

One of the purposes of the HSA interview is to determine your annual HSA contribution limit.

As you probably know, the maximum limits in 2016 are:

  • $3,350 - individual with self-coverage
  • $6,750 - individual with family coverage
  • If the HSA owner is 55 or older, then you add $1,000 to these amounts.

However, these limits assume that you were in an HSA all year. If you left the HSA during the year or started Medicare or had one of a number of change events, then the limit is reduced.

There are several major culprits for excess contributions (other than just actually contributing more than the limit).

First, if you did not complete the HSA interview - that is, go all the way from Federal Taxes->Deductions & Credits->Medical (click on "HSA MSA Contributions") until you are returned to the "Your Tax Breaks" page - the limit still might be set to zero, causes a misleading excess contribution message.

There are questions all the way to the end of the interview that affect the annual contribution limit.

Second, it is not unusual for taxpayers to accidentally duplicate their contributions by mistakenly entering what they perceive to be "their" contributions into the second line on the "Let's enter [name] HSA contributions" screen (see screenshot below).

Normally, any employee who made contributions to his/her HSA through a payroll deduction plan has the contributions included in the amount with code "W" in box 12 on the W-2. This is on the first line on this screen (above). Your contributions by means of payroll deductions must not be entered on the second line.

Third, if you weren't in the HSA all 12 months, then the annual contribution limit is reduced on a per month ratio.

#2 is the cause of most unexpected excess contributions.

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