You may have made excess contributions to your HSA or you may have mistakenly indicated to TurboTax that you did so.
Please read the following for some common reasons how taxpayers indicate an excess contribution.
One of the purposes of the HSA interview is to determine your annual HSA contribution limit.
As you probably know, the maximum limits in 2017 are:
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 (see screenshot below).
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.
Fourth
, if you had a carryover of excess contributions from 2016, then
this carryover is applied to 2017 as a personal contribution, which could cause
an excess condition in 2017 as well. But
note: if you had an excess contribution in 2016 but cured it by withdrawing
the excess in early 2017, then do NOT report an "overfunding" on your
2017 return.
The Turbo Tax Message says, Check your 2018 year tax return and look for form 5329 See an amount on line 48. My 2018 tax return does not contain a form 5329? Thanks
Is this a question, @twave112, or just a clarification?