HSA Overcontribution Calculated Incorrectly

[jgs12345]

We overcontributed to my wife's HSA in 2023 and decreased her contribution in 2024 by more than enough to offset the difference, because the only way you can reduce the overcontribution if you realize after you file is to have a lower contribution in the following years. However, TurboTax insists that she has still over contributed even though the past over contribution plus her current years contribution is under the limit. It's essentially telling us that the amount we "under-contributed" by this year is actually an overcontribution. And this is after we were already conservative and only looked at the individual limit, not the family limit that she qualifies for. 

There was a similar issue last year with how the system calculated these numbers and I saw at one point it was reported in this forum, but still took several weeks to resolve once it was known to TurboTax. I'm posting here bc I tried the "live" tax assist last year and the "help" was absolutely useless. 

Can someone help me understand how to report a bug in the software to TurboTax, like was done last year?

[MindyB]

I have tested the HSA entry in TurboTax, and the results are as expected. Are you manually entering your HSA contributions made through payroll in the HSA entry in TurboTax? If so, you shouldn't do that as you will be double-counting your contributions. If you only contributed through payroll, these amounts are on your W-2, Box 12, Code W.   ‌You also need to make sure you have indicated you have a high-deductible health plan all year. 

According to Why am I showing an excess HSA contribution?, the 2024 maximum for both employer and employee HSA contributions was $8,300 if you have a family plan, plus $1,000 if you were 55 or older at the end of 2024. ‌Compare W-2 Box 12, Code W to this amount.  Then, check the HSA entry in TurboTax Online.  You want to see the Code W amount show up, and not be editable in the HSA section of TurboTax.  If it is wrong there, fix the amounts in the W-2 entry.  Here's how to check in TurboTax Online:

• Click on Federal Taxes,  Deduction & Credits
• Choose "add/edit" HSA, MSA Contributions
• You will see a page titled "Your HSA Summary" which will show any deductions already computed from your W-2  
• Choose Edit, Check the box for HSA, Continue
• You'll now see a screen that says "Here's what we have so far" with the information from the 1099-SA, choose "Edit"
• After the entry screen for the amount distributed, continue and when it asks "Did you spend your HSA money on medical expenses only?" answer "Yes", if accurate. 
• Choose done and continue until you get to a screen that says "Let's enter your HSA contributions"
• In the box "Any contributions you personally made (not through your employer)" DON'T enter the amounts you contributed through paycheck withholding. It has already been considered through your W-2 entry.
• Continue on, and if you were covered by Medicare, you will need to indicate what months this was the case, as your contributions will be limited.
• Next, you will be asked if you were covered by a High Deductible Health Plan (HDHP) in 2024? You need to have been covered the whole year to be allowed to make the maximum HSA contribution. Choose the proper plan beneath that.