Excess contribution in 2022 HSA results in 2023 Excess Contribution? -- Solved

[ywy1611]

Hi,

• In 2022: Husband made $3975 to HSA contribution under a family HDHP for him and kids. I made $3942 contribution to HSA under a self-only HDHP. That resulted in $617 over contribution. When filing tax, I just choosed On, we're not going to withdrawal and there was $37 additional tax added to our return. 
• In 2023: Husband made $3850 and I made $3850 to HSA both under the same HDHP as the previous year. 
• Now Turbo tax is saying that we have an excess contribution of $1, 184? How did this happen? Did I really over contribute? Or is there somewhere in Turbo Tax I can edit to make it go away? Thank you!

[Opus 17]

Assuming your figures are correct, you should have an excess of $567.  The allowable family maximum for 2023 is $7750, and you contributed $7700.  That extra $50 you have under this year's cap should be applied to the prior year excess, leaving you with a current excess of $567.

You may have entered something incorrectly.  Remember that workplace contributions are only entered from your W-2 -- turbotax gets them automatically from box 12 with code W.  So double-check your W-2s.  When you are asked if you made any additional contributions, only enter out of pocket contributions you paid directly to the HSA bank, not workplace contributions.  Also check to make sure that you have told the program you  both had qualifying HDHP coverage all year.

Did you enter that you each had a $617 excess?  For purposes of this calculation, you should assign the excess to just one of the HSAs.

Other than those checks, you would need to look at the program internal worksheets to see if you can find what went wrong. If you are using the desktop program you can switch to forms mode but if you are using turbotax online, you need to call customer support so someone can look at the internals of your tax file. 

[ywy1611]

Hi, 

I am looking at the output of form 5329. 

It calculates as: 

Line 46: prior year excess contribution $617.

Line 47: excess contribution of 2023 $567

Line 48: Total excess contribution $1184

And it's calculating a total tax of $71 for additional tax on line 49. 

My question is: is this double counting or is it the way it should be? If it's double counting, how do I remove the $617 from prior year.  My W2s are exactly $3850 and $3850 from box 12W. 

Thank you so much for the reply. 

[Opus 17]

The $617 carryover is correct, it is the $567 current year excess that is wrong.  If you can access the forms, you need to look at both copies of form 8889 (yourself and your spouse) to see where the $567 is coming from.  

[ywy1611]

Hi, you are 100% correct.

It's form 8889 calculating the $567 for line 2 as the self-contribution I made this year. 

I manually zero-ed it out. I think this is the correct way to go. 

I really appreciate the help. Thank you!

[dmertz]

The doubling is a result of a bug introduced with the February 8, 2024 update to 2023 TurboTax.  Intuit is aware of the problem.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/insurance-medical-benefits/turbotax-desk...

Note that your excess-contribution penalty will continue every year until the excess is corrected either by taking a taxable distribution of the excess from the HSA (which would also subject to a 20% for being under age 65) or applying it as part of an HSA contribution for the current year.  Since you seem to continue to be eligible to contribute for 2024, just make sure to reduce the contributions for whichever of you has the excess so that the excess can be absorbed in 2024 (and hope that TurboTax fixes the bug).