HSA contribution excess

[car1234]

My 2025 employer and payroll contributions to my own HSA account: $4,300 (self-plan).

Wife's 2025 employer and payroll contributions to her own HSA account: 8,550 (half year self-plan, half year Family plan).

TurboTax is saying we overpaid with excess contribution of $4,300.

I thought that since we have separate plans and separate HSA accounts that the limit would count separate, is it not true? Does this change if we are filing separately?

What are the implications of withdrawing vs not withdrawing the excess?

[BillM223]

No, if you have Family HDHP coverage, then the Family limit of $8,550 is shared between the spouses. TurboTax will share the limit automatically so as to minimize the excess or to reduce it to zero if possible. Thus for you to contribute as if you were under Family coverage at the same time that your spouse was contributing as if under Self coverage will trigger excess contributions. If your spouse if using Self-only coverage limits for certain months, then you cannot use more than the same Self coverage limit (not full Family) for the same months.

I imagine that things will go worse for you if you file separately, if for no other reason than the difficulty of entering things the way you want under MFS.

You generally want to withdraw the excess if you can. The reason is because any excess not withdrawn by the original due date of the return is carried over to the next year to be used as a "personal" (line 2 (8889) contribution) and is charged a 6% penalty.

If you are a disciplined taxpayer and are sure to reduce your HSA contributions for the next year AND are sure that you will have HDHP coverage the next year, then you can "let the carryover ride" at a 6% cost, and use up the carryover in the subsequent years. You need to count on your fingers to see which is better for your situation...as I said, withdrawing is generally preferable, if you can do it.

[Opus 17]

Sorry, the limits do not stack.  $8550 is the combined maximum as well as your wife's personal maximum.  She can contribute $8550 and you nothing, or you can each contribute $4275, or you can divide the limit in any other way that makes the math work.

If you leave the excess in the account, you will pay a 6% penalty this year and every other year until the excess is resolved.

One way to resolve the excess is--assuming you are eligible to contribute next year (2026)--contribute no more than $8750-$4300=$4,450.  The excess from 2025 will be applied to the remaining "space" under the 2026 cap.  But this will cost you $258 in penalties.

The other, more conventional way to resolve it is to contact the HSA bank and ask to remove $4300 from one of the accounts as an excess contribution.  This is  a special procedure and probably requires a special form, it is not a regular withdrawal.  The bank must return the excess to you with any interest it earned.  The interest is taxable income on your 2025 return, but you won't pay the penalty.  Then you can contribute the full amount ($8750) for 2026. 

MFS will not help at all, you will still have a $4300 excess, plus all the other lost deductions and higher tax rates of filing MFS.