Your employee contributions through a salary reduction plan are supposed to appear on line 9 of the form 8889, not on line 2. Here's why:
It is counter-intuitive but employee contributions to an HSA made through a salary reduction plan with the employer are called employer contributions by the IRS. This is because both the contributions made by the employer and contributions made by the taxpayer through a salary reduction arrangement are treated the same way (they are both pre-tax).
The IRS says in Publication 969: "Contributions made by your employer aren’t included in your income. Contributions to an employee's account by an employer using the amount of an employee's salary reduction through a cafeteria plan are treated as employer contributions."
You should have no HSA deduction on line 13, because your HSA contributions were already removed from Wages in boxes 1, 3, and 5 on your W-2. Line 13 is only for contributions that you made outside of your employer (i.e., with post-tax dollars, not the pre-tax dollars in your salary reduction arrangement).
The most likely reason that excess contributions are showing is because the HSA interview has not been completed. The IRS assumes that contributions are taxable until a properly completed form 8889 is attached to the return. TurboTax completes form 8889 only at the end of the HSA interview.
To do this in TurboTax Premier:
- please go to Federal Taxes->Deductions & Credits->HSA, MSA Contributions
- either Start or Edit to restart the HSA interview
- Please be sure to go all the way to the end of the interview.
NOTE: there is nothing wrong with your W-2 if the complete amount of the contributions is with code "W" in box 12 of the W-2.
