Last year I have contributed to and received ditributions from an HSA and a limited purpose FSA. Turbotax does not seem to address this use case. Have I missed something?

There is nothing reported on your tax return with regard to the limited purpose FSA.  You did not miss it.

You only need to be concerned with the contributions and distributions of the HSA (Health Savings Account).

I have the same issue. My W-2 reports an amount on Box 12 that is the combined HSA and LPFSA contributions. So TurboTax software is treating all my LPFSA contributions as excess HSA contributions.

If the LPFSA is not supposed to be reported, should I ask my employer to reissue a corrected W-2 with only HSA amount in Box 12?

Yes. The first thing you should do is contact your employer and ask for a corrected W-2.  As you stated, once you place the entire amount in Code W of Box 12 of your W-2, it will tax you on the excess contributions. Your W-2 input does have to match what is submitted to the IRS. 

Although there is a way to add additional contributions (that your employer did not know about) on the HSA screens, there is no way to deduct contributions that were not actually made and incorrectly stated on your W-2. 

@goldenho

Lena,

Thanks for looking into this. I have contacted my employer to ask for a corrected W-2.

Strangely enough, we use intuit's payroll (workforce) suite to handle our payroll details. It appears that the settings for the LPFSA may not have been properly tagged when they set this up.

@AnnetteB6 

This is correct for Federal income tax, but not for NJ state tax.

NJ does not allow deductions for health insurance premiums, but allows deductions for health care expenses that are over 2% of gross income, and the FSA is relevant for this.

Please see this discussion about New Jersey and FSA taxation.