you misunderstand or are doing something wrong becuase the $1150 excess is being withdrawn from your post tax contributions to your HSA. both HSA worksheets must be marked as family coverage
Example
her w-2 with code W - HSA $5400 includes $1100 contributed by employer (box 1 of w-2 reduced by $4300 her contribution to HSA)
you directly contribute $4300 to your HSA, which you enter in Turbotax
the total contributions to the two accounts is now $9700, which exceeds the family maximum of $8550 by $1150.
you indicate to Turbotax in your HSA worksheet that you are withdrawing the $1150 excess FROM YOUR ACCOUNT before 4/15/2026. as such, your HSA deduction is reduced from 4300 to $3150. You are not taxed on the $1150 because you have not gotten a deduction for it. so the both of you have had HSA contributions for 2025 of $5400 +3150 =8550 of which you actually paid $7450. (for some reason congress made the family contribution $50 less than two self-only contributions
if you withdraw the excess from your spouse's account it will be taxed (but then you withdraw nothing from your account so you get a deduction of $4300
box 1 of spouse's w-2 is reduced by $4300 her contributions
then there is the $1150 that is taxable
and your deduction of $4300 for direct contributions
the net is $7450. the same as anove
