topic Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions? in Deductions & credits

Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

waterdoc1 — Sun, 15 Feb 2026 20:37:26 GMT

My employer made pre-tax contributions to my HSA in 2025 of $1020. I found out I am ineligible to make this contribution because I signed up for Medicare. I entered form 1099-SA correctly and chose distribution code 2 (excess contributions) and selected the "yes" box to the question "Tell us if your excess HSA/MSA contribution was made by your employer and deducted from the wages in box 1 of your W2". However, Turbo Tax shows this amount as "Tax-free employers contributions". I'm sure that is incorrect as this amount should be added to my income as "Additional income from schedule 1, line 10" on line 8 of Form 1040. Is this a software error?

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

BillM223 — Mon, 16 Feb 2026 22:34:33 GMT

No, there is no software error.

When TurboTax discovers that you have excess contributions and that these contributions came from "employer contributions" (i.e., in Box 12 of your W-2 with a code of W), then TurboTax immediately adds the amount of the excess contribution to line 8f on Schedule 1 (1040). This is why you do not have to go looking for a way to add the excess back to income - TurboTax has already done it for you.

This is also why TurboTax asks "if your excess HSA/MSA contribution was made by your employer and deducted from the wages in box 1 of your W2", because if the answer is "yes", then TurboTax knows that the excess was already added back to income so doesn't need to do anything else.

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

waterdoc1 — Mon, 16 Feb 2026 23:43:05 GMT

Sorry, but Turbo Tax didn't do that. It only inserted $61 that I received from the excess earnings in 2025, not including the $1020 that was contributed tax free from my employer in 2025. Most of the $61 in earnings were from the excess contributions from the previous year, which I got in early 2025. The excess contribution for 2024 was returned to me in March of 2025 and was accounted for on my 2024 return (the excess was returned to me before the 4/15/2024 filing date), but the earnings were not. About $10 of the $61 were from the excess contributions I made in 2025 and all of my remaining excess contributions of $1020 and earnings were returned to me December 24, 2025 and were reported on my 1099-SA.

The problem started when I found out in February of 2025 that I was no longer eligible to contribute to my HSA. But by that time, I had already signed up for a high deductible health plan for 2025 and couldn't change it. I reduced my contributions to my HSA by as much as my plan would allow, which is why I only had $1020 sent to my HSA for 2025 and only ~$10 in earnings. Here is a screenshot from my TurboTax return, schedule 1, Line 8. It should read $1081according to your answer.

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

BillM223 — Tue, 17 Feb 2026 16:55:41 GMT

It's unfortunate that we cannot see your screenshot (this ability doesn't seem to be with us this year), because I don't understand your situation.

On your W-2 in box 12 with a code of W, you had $1,020, correct? And you marked every month in 2025 as being on Medicare (or None), correct?

In this case, TurboTax should have told you on a custom screen in the HSA interview that you had excess contributions of $1,020 and asked you what you wanted to do with it. You evidently answered that you wanted to withdraw the excess by the due date of the return, correct?

So TurboTax in this case would add the excess $1,020 back to your income on line 8f on Schedule 1 (1040). So what did I misunderstood something on your part?

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

waterdoc1 — Tue, 17 Feb 2026 17:57:41 GMT

"On your W-2 in box 12 with a code of W, you had $1,020, correct? And you marked every month in 2025 as being on Medicare (or None), correct?" Correct to both questions.

"In this case, TurboTax should have told you on a custom screen in the HSA interview that you had excess contributions of $1,020 and asked you what you wanted to do with it." No, it never asked that question and that's where I think the problem is. When I had excess contributions in 2024, TurboTax 2024 did ask that question and I expected TT2025 to do that as well, but it did not. And TT2024 did treat that distribution correctly by adding it to my 2024 taxable income. The HSA summary screen shows:

Deduction $0
Total Distributions $5495 (Comment: I paid 2024 taxes on $4475 of this amount since I got the distribution prior to the 4/15/2025 due date.)
Taxable Distributions $0
Taxable Earnings on Excess Contributions $61
Tax-free employer contributions $1020
Excess employer contributions withdrawn $0

I've retried it many times and get the same result.

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

BillM223 — Tue, 17 Feb 2026 22:58:05 GMT

I cannot reconcile what you describe with what I see in my tests. In my tests, the code W amount shows up as "Excess employer contributions withdrawn" because I chose to tell TurboTax that I would withdraw it (as I think you did).

However, I am struck by one comment that you made: "I've retried it many time and get the same result".

Occasionally, a number in TurboTax gets "stuck"; that is, the number stays in TurboTax from pass to pass, even when you have changed other values which should have caused that number to go to zero (or at least change).

The only cure I have ever found for this is to do an "HSA Reset", which is a process by which you remove all the HSA data so that you can start again fresh. Although it is a certain amount of work, it will be faster and more certain than going through the interview over and over hoping to get it right.

Just remove all HSA data as shown below.

HSA RESET

***Reset***

1. make a copy of your W-2(s) (if you don't have the paper copies)

2. delete your W-2(s) (use the garbage can icon next to the W-2(s) on the Income screen)

*** Desktop/Windows***

3. go to View (at the top), choose Forms, and select the desired form (1099-SA (if one), 8889-T, and 8889-S (if one)). Note the Delete Form button at the bottom of the screen.

*** Online ***

3. go to Tax Tools (on the left), and navigate to Tools->Delete a form

4. delete form(s) 1099-SA (if one), 8889-T, and 8889-S (if one)

5. go back and re-add your W-2(s), preferably adding them manually

6. go back and redo the entire HSA interview....

If you are using Desktop/Mac, let me know - I will look up how to delete a form on the Mac.

If by some odd chance, you see a form 8853, please delete it as well, as well as the MSA worksheet that goes with it (probably right below).

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

waterdoc1 — Wed, 18 Feb 2026 21:39:37 GMT

Bill,

Sorry, but the workaround didn't change anything. I'm still stuck with $1020 that I should be adding to my income that TurboTax says are tax free employee contributions. Did everything you suggested. Deleted the forms and deleted and readded my W@. Went through the HSA interview and said I had Medicare and it didn't ask anything else.

At this point, unless you can push out an update that will fix it, I just may as well file my taxes (I'll wait until April 15) and wait for the IRS to come after me for the tax I owe on $1020. Or maybe they never will. But I will get the TT Audit Defense this year so if I get audited, I'll let Intuit explain the software issues I've had to the IRS. Maybe they'll waive the interest and penalties, which probably won't amount to much anyway.

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

lincolnx — Fri, 20 Feb 2026 19:47:58 GMT

I have the same issue. I have medicare and company contributed some money. Before 2025, it asked the question but in 2025 vesion, it did not ask this question any more. We need a fix.

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

BillM223 — Fri, 20 Feb 2026 23:14:15 GMT

I have created a test that more closely resembles your situation: excess contributions in 2025, and a 1099-SA withdrawal of the excess in the same year (late 2025 or early 2026). Does this match your situation?

I answered the "Tell us if your excess HSA/MSA contribution was made by your employer and deducted from the wages in box 1 of your W2" question with "Yes". In the HSA Summary, the Tax-free employers contributions are zero, not $1,020.

Do me a favor. When you get to the HSA interview where it says that the $1,020 is "Tax-free employers contributions ", please go see your 1040 Preview (do you know how to get there?). Look to see if the $1,020 (or $1,020 plus whatever interest was in box 2 on the 1099-SA) is on line 8f on Schedule 1 (1040).

If the $1,020 is not on line 8f, then the $1,020 really is tax-free, and we have a different issue here.

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

waterdoc1 — Sat, 21 Feb 2026 15:34:22 GMT

Bill,

The scenario you modeled is correct. I received my excess contribution distribution for 2024 in March of 2025 and another distribution in late December 2025 for my total excess contributions made in 2025. This happened because I found out in February 2025 that having Medicare (signed up in March 2024) made me ineligible to contribute to my HSA for 10 months when I did my 2024 taxes. By then it was too late to change my healthcare plan to totally stop HSA contributions in 2025, but I reduced them to the minimum allowed by my plan. I figured I would take care of all of this on my 2025 taxes by taking the distribution in December 2025 instead of having to worry about this for 2026 taxes.

I updated TT2025, then went through the HSA interview as you suggested. Line 8f on my 2025 form 1040 does not include the $1020 that should be there. It only shows the $61 in earnings that I got in 2025. So, yes, I guess we do have a different issue.

I really appreciate your help. I think most other folks in this same situation wouldn't catch this error in their favor (see chat string, one other person has the same problem). I know I owe the taxes on the $1020 excess contribution deducted from my W2 earnings by my employer. I just want to do the right thing.

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

BillM223 — Mon, 23 Feb 2026 19:22:29 GMT

I am getting closer to fully understanding your situation.

First, please tell the the info in boxes 1, 2, and 3 on the two 1099-SA forms and dates (months/year is OK) in which you requested them.

Second, for each 1099-SA, how did you answer the question "Did [name] have excess contributions deducted from their wages?" Yes or No?

Third, can you give me all the non-zero values on your HSA summary at the end of the HSA interview?

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

waterdoc1 — Mon, 23 Feb 2026 21:04:10 GMT

OK, thanks

1099SA #1--This one was handled correctly. All distributions used for medical expenses.

Box 1--$1121.57

Box 2--0.00

Box 3-- 1

1099SA #2--This is the problem child

Box 1--$4372.93

Box 2-- $60.95

Box 3-- 2

My two distributions related to 1099SA #2

$3353 March 2025 + $51 earnings (estimated--see below)
$1020 December 2025 + $10 earnings (estimated--see below)

Here's something that may be significant. When I get to the interview question "Enter last year's excess contribution" it says I can find that on line 48 of my 2024 Form 5329. But my 2024 return does not have a Form 5329! It has Schedule 1 showing $3292 on line 8f and $1660 (gambling winnings) on line 8b and the total transferred correctly to line 8 on my Form 1040. To the interview question above, I tried inputting zero, then my estimated excess of $3353 and ran it again. See the results:

Input $0 Input $3353

Deduction $0 $3353

Total Distribution $5495 $5495

Taxable distributions $0 $0

Taxable earnings on excess contributions $61 $61

Tax-Free employer contributions $1020 $1020

Excess employer contributions withdrawn $0 $0

Either scenario shows no taxable distributions. I should be paying taxes on $1081 (excess + earnings) on my 2025 return, correct?

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

waterdoc1 — Mon, 23 Feb 2026 21:07:21 GMT

Forgot to mention that I answered "yes" to the question "Did [name] have excess contributions deducted from their wages?"

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

BillM223 — Mon, 23 Feb 2026 22:39:12 GMT

I want to confirm: you had excess HSA contributions in 2024, but you withdrew them all before the original due date of the return (April 15, 2025). This is the $3,353.

If so, then when you are asked about last year's excess contribution, just enter zero. In fact, when you withdraw the excess in a timely manner, you answer "No" when you are even asked if you had an excess contribution, because by withdrawing the excess in a timely manner, you "cured" the excess.

You aren't supposed to have a 5329 in this case, because the 5329 reports on something like 9 different penalty situations, none of which apply to you since you withdrew the excess in a timely manner.

I keep working on my test, and it insists on showing $1,081 ( $1,020 plus $61) on line 8f (Schedule 1 1040). This is, of course, correct, though I cannot imagine why your return does not show the same thing.

But, of course, I am more concerned about your tax return than your HSA Summary. OK, go back and answer "No" to the question of "Did you overfund your HSA last year?". Then let's see what happens.

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

waterdoc1 — Tue, 24 Feb 2026 17:36:29 GMT

"I want to confirm: you had excess HSA contributions in 2024, but you withdrew them all before the original due date of the return (April 15, 2025). This is the $3,353." Correct.

"OK, go back and answer "No" to the question of "Did you overfund your HSA last year?". Then let's see what happens." No change. HSA summary looks like the "$0 Input" readout in my last message.

Line 6 in my Form 1040 shows only $61, not the $1081 like you got.

Maybe I can manually make adjustments to the schedules and Form 1040 to get through this? I'm comfortable working in Form view.

Would it help to know that I purchased my digital TT2025 copy from Amazon, then downloaded it from the Intuit site?

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

BillM223 — Tue, 24 Feb 2026 18:23:24 GMT

1. I have no idea if buying a digital copy from Amazon and downloading it from Intuit would make any difference, I would tend to think "no", but we in the Community are here to answer tax/law oriented questions, so I would not know anyway.

2. Yes, you can certainly make the overrides in Forms mode, although for the "normal" situation we discourage that. Note that if you do the overrides, there may be two effects:

2.A. You may lose the Accuracy Guarantee.

2.B. You might not be able to e-file your return (print and mail will still be an option).

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

waterdoc1 — Tue, 24 Feb 2026 18:41:58 GMT

Bill, If you have any more ideas, I'm willing to try them. If not, and you could guide me how to make the changes manually, I would appreciate it. I think I'm more at risk signing off on a return that I know has a mistake than taking the chance of losing the accuracy guarantee. I sold a 2nd home in January 2026 and will owe capital gains taxes on the sale so I'm going to apply my 2025 refund to my 2026 taxes (+ quarterly estimated payments). So if I need to file by mail I can do that since I won't be waiting on a refund check either way.

Again, I appreciate you hanging in there with me.

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

BillM223 — Tue, 24 Feb 2026 21:40:23 GMT

OK, let's look at unlikely, but possible possibilities.

1. Delete the two 1099-SA forms (or all of them if you have more than two. There has been a perhaps related issue this year that when you try to add the second 1099-SA, it just edits the first 1099-SA. While that is not your issue on its face, long ago in programming, I learned that you fix the problem that you know and sometimes by magic the bigger problems go away.

2. While we are on the subject of the 1099-SA, how did you enter them? Did you auto-import them or did you enter them manually? I enter them manually so much that I forget that some people do it by import. The auto-import process fails occasionally (probably because the incoming form was created outside of TurboTax), so it's always a good thing to redo it by hand.

3. How did you tell TurboTax that you had Medicare? I am stumped on how TurboTax saw that you had no HDHP coverage (except perhaps with conflicting Medicare), yet did not decide that you had excess contributions.

3.A On the screen "Was Blank covered by a High Deductible Health Plan (HDHP) in 2025?", did you answer Yes or No? The next screen changes depending on your answer.

3.B On the screen, "Do any of these situations apply to Blank?" did you check off that you had Medicare?

3.C On the screen, "What type of HDHP coverage did Blank have during 2025?" (if you saw it), how did you answer it? If you had Medicare all year, you should not see this screen, because it's going to ask you questions assuming that for at least one month, you had HDHP coverage. If so, this is bad if you had Medicare all year.

3.D On the screen "What type of High Deductible Health Plan did Blank have on December 1, 2024?" - this is good, because TurboTax has moved to the next subphase, which is to figure out if you owe money due to "Failure to Maintain HDHP Coverage". That is, the last-month rule gives you the benefit of allowing you to use the full annual HSA contribution limit for your class of coverage (Self or Family) if you have HDHP coverage on December 1st of the tax year. The catch is that you have to have HDHP coverage for the entire subsequent year, hence, the "failure to maintain".

This question shows that TurboTax has moved on to the last-month rule processing, since you did not have HDHP coverage in the current tax year (2025). By this point, TurboTax knows whether or not you have excess contributions even if it hasn't told you yet.

News! News!

I can get the $1,020 to not show up on Schedule 1 (1040), if I change your input.

In the 1099-SA interview for the second form ($4,372.93), when TurboTax asked me "Did Blank have excess contributions deducted from their wages?", I answered No. Why, because I was pretending that the $1,020 did not come through the employer (W-2), but directly from the taxpayer. It is odd that this question presumes that you have an excess, when there is not enough data yet to show this one way or the other.

Then I changed the W-2 to remove the code W amount in box 12, pretending that the $1,020 did not come through the employer. Then I entered the $1,020 as a "personal" contribution.

As I continued, TurboTax never told me that there were excess contributions. This is a radical change from previous years. In this case, since you had no HDHP coverage, it was obvious that the $1,020 was in excess, so it did not bother to make then same announcement that it had made in previous years.

Now, when I get to the HSA Summary, I see zero dollars for tax-free employer contributions, zero dollars for excess employer contributions withdrawn, and $61 for taxable earnings on excess contributions. In addition, I see only $61 on line 8f on Schedule 1 (1040).

This is great...except this is not what you entered(!).

But I now see that TurboTax is not working the same way that it has for years. I guess this should as no surprise, since they changed the dialogue in the interview a lot. For example, the question "Did Blank have excess contributions deducted from their wages?" is brand-new. I question whether or not it should be asked in the 1099-SA interview, since on the first pass, TurboTax doesn't know if you have an excess - it can know only if you go back and re-enter the 1099-SA.

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

waterdoc1 — Wed, 25 Feb 2026 17:30:36 GMT

Bill,

I was able to get the correct taxable amount of $1081 into both Schedule 1 and line 8 of Form 1040, but I had to answer interview questions counterintuitively as follows screen by screen, along with my comments:

Did [me] have excess contributions deducted from their wages? Yes

Let’s enter [my] HAS contributions. 2025 employer and payroll contributions (Box 12 if your W-2)

$1020—this was auto populated and not editable but is correct.

Was [me] covered by HDHP in 2025? "No", and here’s where I think the software needs fixing. TT2025 doesn’t seem to recognize that someone can be covered both by a HDHP and Medicare at the same time. Answering the question “yes” because I was covered by a HDHP plan makes the $1020 non-taxable, while answering “no” makes the $1020 taxable. It doesn’t seem to recognize that I had a HDHP but couldn’t contribute to it because I also had Medicare. This wasn’t a problem with TT2024.

Do any of these situations apply to [me]? [Me] had Medicare. No other boxes checked

What type of HDHP plan did [me] have on December 1, 2024? Selected “none” based on our previous conversation that what happened in 2024 (I took the excess distribution by the due date and correctly paid taxes on it on my 2024 return) is irrelevant to the 2025 return.

Let’s review what type of coverage [me] had in 2024. Selected “Medicare or none” for the entire year, again relying on the fact that what happened with 2024 taxes is irrelevant to 2025.

Do you want to withdraw excess money from your HSAs? Selected “no” and the $1020 stayed taxable. Selecting “yes” makes the $1020 nontaxable. Another screen where someone can be tripped up.

What’s the total value of all your HSAs? Nothing changes regardless of what number entered, so I just estimated my HSA’s current value.

Your HSA Summary

Deductions $0

Total distributions $4373

Taxable distributions $0

Taxable earnings on excess contributions $61

Taxable employer and IRA rollover contributions $1020

Tax-free employer contributions $0

Excess employer contributions withdrawn $0

So, no taxable HSA distributions, but $1020 IRA rollover contributions? Where did that come from? There are no forms put in the return having anything to do with IRAs (thank goodness). Form 8889T appears to be correct (line 12C is $1020) and Form 1040, line 8 is $1081, exactly what it should be. At this point I just need to know if there’s anything I missed. Any other forms I should check.

Based on this behavior of TT, do you agree that the software needs to be fixed and should I just wait to file until it is?

And finally, I switched health care plans for 2026 to a non-HDHP so all of this goes away for 2026 taxes! Whew…..

Re: Is there a glitch in TurboTax Deluxe 2025 regarding excess HSA contributions?

BillM223 — Wed, 25 Feb 2026 19:35:22 GMT

I think much of the issue is caused by the presumption that taxpayers don't usually withdraw excess HSA contributions before the end of the tax year, because they don't realize that they have excess contributions until TurboTax tells them (after the end of the year). Therefore, TurboTax is going to show the excess made through the employer as income, because the end of the tax year has come and gone.

Yes, TurboTax might consider upgrading the HSA interview to ask you when the withdrawal took place so it could reduce the excess and the taxable income, but right now, it is not equipped for that.

"T2025 doesn’t seem to recognize that someone can be covered both by a HDHP and Medicare at the same time." Yes, this can be confusing, although more this year then in previous years. If you have conflicting coverage to your HDHP (like Medicare), you are supposed to enter data as if you have no HDHP.

This year, they changed the HSA interview a lot and made the question "Was [name] covered by a High Deductible Health Plan (HDHP) in 2025?" more important than it was in 2024. I think this contributed to the confusion about HDHP and Medicare or other conflicting coverage.

Don't worry about IRA rollovers. The fact is that you have always(?) - well, for quite a while - been able to make a qualified HSA funding distribution. That is, transfer trustee-trustee money from a normal IRA to your HSA. This becomes another way to make excess contributions in addition to just making normal contributions, which is why it got added to this line.

However, the restraints on the qualified HSA funding distribution are severe, so you won't see it often.

I think that if your tax forms are looking the way you want, that you can go ahead and file - I doubt that anything will be "fixed" this tax season. It is somewhat a matter of taste how the interview questions are done, and they vary from year to year. As long as your taxable numbers are what you want, at least on the HSA side, you are good to go.