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styrafoam
New Member

Im told my HSA has an excess contribution of 1000, by my employer This is the only amount contributed in 2017. It has been the same for years. Has something changed?

 
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BMcCalpin
Level 13

Im told my HSA has an excess contribution of 1000, by my employer This is the only amount contributed in 2017. It has been the same for years. Has something changed?

There are a number of reasons why you might appear to have an excess contribution when you actually don't. Please read the following:

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:

  • $3,400 - individual with self-coverage
  • $6,750 - 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 (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 the HSA all 12 months, then the annual contribution limit is reduced on a per month ratio. 

Fourth, if you carried over an excess contribution from 2016, this could result in an excess in 2017 as well.

Fifth, in your case, did you report that you were in an HDHP all year?

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3 Replies
BMcCalpin
Level 13

Im told my HSA has an excess contribution of 1000, by my employer This is the only amount contributed in 2017. It has been the same for years. Has something changed?

There are a number of reasons why you might appear to have an excess contribution when you actually don't. Please read the following:

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:

  • $3,400 - individual with self-coverage
  • $6,750 - 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 (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 the HSA all 12 months, then the annual contribution limit is reduced on a per month ratio. 

Fourth, if you carried over an excess contribution from 2016, this could result in an excess in 2017 as well.

Fifth, in your case, did you report that you were in an HDHP all year?

styrafoam
New Member

Im told my HSA has an excess contribution of 1000, by my employer This is the only amount contributed in 2017. It has been the same for years. Has something changed?

I belive the issue is that though I do have an HSA it is not part of an HDHP. My plan is  a CDHP and deductions were much less than turbo tax help page indicated as required.
BMcCalpin
Level 13

Im told my HSA has an excess contribution of 1000, by my employer This is the only amount contributed in 2017. It has been the same for years. Has something changed?

A CDHP an industry term, not an IRS term. A CDHP generally combines a high deductible health plan and a tax-advantaged savings tool, such as a Health Savings Account (but could be HRA or FSA). If your health plan is not an HDHP, then your employer should not have offered to help you set up an HSA (I assume they did).

Contact your HR or benefits department and confirm whether or not you are in an HDHP (that's the health plan itself). If you are, then answer the HDHP questions in TurboTax as "yes". Otherwise, ask your employer why they are contributing to your HSA when they know you are not eligible.

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