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evanskmc
New Member

Is TurboTax correct when it says that my HSA contribution of $4500 is $2250 over the family limit of $6750, or is TurboTax committing a math error?

 
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Opus 17
Level 15

Is TurboTax correct when it says that my HSA contribution of $4500 is $2250 over the family limit of $6750, or is TurboTax committing a math error?

You probably entered your contribution twice.  Contributions made by payroll deduction are automatically recorded in box 12 of your W-2 with code W.  Later in the program when you are asked for additional contributions, only report additional out of pocket contributions NOT ALREADY included in your W-2.

$6750 + $2250 = $9000, which is double $4500.  So I'm betting you doubled your contribution.  Go back and remove the entry for additional contributions.  

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

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2 Replies
Opus 17
Level 15

Is TurboTax correct when it says that my HSA contribution of $4500 is $2250 over the family limit of $6750, or is TurboTax committing a math error?

You probably entered your contribution twice.  Contributions made by payroll deduction are automatically recorded in box 12 of your W-2 with code W.  Later in the program when you are asked for additional contributions, only report additional out of pocket contributions NOT ALREADY included in your W-2.

$6750 + $2250 = $9000, which is double $4500.  So I'm betting you doubled your contribution.  Go back and remove the entry for additional contributions.  

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
BMcCalpin
Level 13

Is TurboTax correct when it says that my HSA contribution of $4500 is $2250 over the family limit of $6750, or is TurboTax committing a math error?

The family limit of $6,750 is established for a taxpayer or taxpayers who are in an HDHP plan with Family coverage, and when the HSA owner is not 55 or older.

Even if there were two taxpayers, each with an HSA, if either taxpayer was covered by a Family plan, then the IRS considers that both taxpayers were covered by a Family plan, for purposes of calculating the annual HSA contribution limit. Thus, the absolute maximum contribution for two taxpayers together under a Family plan under 55 years of age is $6,750.

Sometimes, married taxpayers both contribute to their HSAs up to the limit, not realizing that the $6,750 is for both spouses together.

In this case, the mostly likely possibility is:

There was an amount of $4,500 on your W-2 in box 12 with a code of W. This is the sum of your employer contributions and your contributions by means of payroll deduction. If on the "Let's enter your HSA contributions screen" (see screenshot below), you entered the $4,500 as your personal contribution (because it was your payroll deductions that paid), note that you duplicated the amount, because that $4,500 was already in line one on that screen.

If this is not the cause of the apparent excess contribution, please see 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 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.

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