We didn't overpay our HSA, turbotax flagged $x as excess contribution and recommends we take it out. our contribution is with in the 2024 limit. Plz help understand this?

TurboTax computes your HSA contributions by combining input from 2 places. First, the entry from your W-2, and secondly from the HSA input where it asks if you also personally contributed anything to your HSA.  The maximum contribution includes both employee and employer contributions, and a married couple cannot go over the family maximum.  For 2024, the family maximum is $8,300 plus an additional $1,000 if you or your spouse are 55 or older.

 

If you know you did not exceed the maximum contributions, it is possible you may have included amounts withheld from your paycheck as "Any contributions you personally made"?  Amounts you "personally made" don't include withholding from your paycheck. This should only include amounts you sent directly to your HSA. If you entered your W-2, your contributions withheld from your pay are already included in your tax return, so entering them again is double-counting them.

 

In order to fix this, compare your records with your W-2 box 12 Code W plus personal contributions.  Then double check the entry for your W-2(s) and the entry for the personal contributions referenced above.  You can navigate to this screen in TurboTax Online by using the magnifying glass icon in the upper right of your screen, typing "HSA" and choosing "Jump to HSA."

 

Also, ensure you indicate that you had a High Deductible Health Plan (HDHP) in 2024, when you are asked in the HSA input section. You need to have been covered the whole year to be allowed to make the maximum HSA contribution.