Why am I told the HSA contribution made in 2022 is over-contributed when I and my employee contribute $1960 in total? There's no Form 5329 from 2021 indicating that.

[graciechristine]

I've been with the same company and the same HSA contribution setting for 5 years now, and like I said, didn't even receive the form 5329 from my 2021 tax return regarding any excess contributions.

I checked and my health plan does say HSA, so I'm obviously eligible. I'm single, so my limit is $3,650, which I'm didn't go over.

Is it because I didn't spend any in 2022? I doubt it, but might as well confirm it.

But can somebody kindly tell me how to resolve this error, since I do not believe I am over-contributing from all the research I've done.

[MayaD]

Make sure you didn't accidentally re-enter the amount already listed (from box 12 code W of your W-2) as this will incorrectly double your total contribution amount.

[graciechristine]

Thanks for the info.

I doubled check it again and I don't know where I can re-entered, so I want to confirm if by entering the HSA info under the income section (outside of the W-2 form and under the less common income category), this is the re-entering you are talking about?

And if that is the case, how can I remove the additional HSA entry? I've tried a few different ways, and could not delete it.

[BillM223]

"when I and my employee contribute $1960 in total? " Did you mean "employer"?

OK, first you need to find the HSA section (there are two entries to the same section, which can be confusing, one under Income and one under Deductions). Then you need to look for one of several things...

#1.

Do a Search (upper right) for hsa (lower case) and click on the jump-to link. Just type hsa and hit Enter - ignore all the suggested search terms. Mac users need to find HSA in the Topics List.

Indicate that you have an HSA on the screen and now you are in the HSA interview.

#2.

It is possible to accidentally indicate to TurboTax that you made excess HSA contributions when perhaps you haven't.

I understand that the following list is long, but these are all reasons that taxpayers get excess contribution messages.

If you find that your situation is not one of these cases, then please make a new post in which you indicate:

• your HDHP coverage and for which months
• your spouse's HDHP coverage and for which months
• your HSA contributions (both through your employer and directly to the HSA)
• your spouse's HSA contributions (both through your spouse's employer and directly to the HSA)
• the amount of the excess
• whether or not either of you went on Medicare and what month
• whether or not (and the amount) of carryover of excess contributions from 2021 for either of you

***main answer***

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

As you probably know, the maximum limits in 2022 are:

• $3,650 - individual with self-coverage
• $7,300 - 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 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 your HSA contributions" screen.

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). Don't enter the code W amount anywhere on the return other than on the W-2 page.

Third, if you weren't in HDHP coverage all 12 months, then the annual contribution limit is reduced on a per month ratio. NOTE, this means that you have to indicate when and under what type of HDHP plan you were. Be sure to answer the questions on the screen entitled "Was [name] covered by a High Deductible Health Plan in 2022?".

Fourth, if you had a carryover of excess contributions from 2021, then this carryover is applied to 2022 as a reduction to the 2022 HSA contribution limit, which could cause an excess condition in 2022 as well. But note: if you had an excess contribution in 2021 but cured it by withdrawing the excess in early 2022, then do NOT report an "overfunding" on your 2022 return.

Fifth, the Family limit ($7,300) is for the aggregate of contributions by both taxpayers, even if both taxpayers have their own HSAs. That is, one taxpayer can’t contribute $7,300 to his/her HSA and the other contribute $3,650 to the other HSA – the $7,300 limit applies to the aggregate of all HSA contributions credited to the family (in this case, the excess contributions would be $3,650).