My employer & I contribute thru work, pre-tax for HSA, but it shows like this: Tax-free employer contributions $4,144 Excess employer contributions withdrawn $4,144

[blue1]

I think it's an error. How to remove the "Excess contribution withdrawn" ?

[MichaelDC]

Despite the misleading name, code W reports both your and your employer's contribution. (If you think the name is confusing, think of it as just "Contributions to Health Savings Account".)

If you put $1,500 in your HSA during 2017, and your employer matched your contribution, your W-2's Box 12 should have the amount of $3,000 with a code W.

A common error that usually results in excess HSA contributions, which are taxable with a penalty, is if you, on the Let's enter your HSA contributions screen, accidentally duplicated the amounts already reported in the first line, contributions from Box 12 of your W-2.

For example, if you have $3650 on your W-2, Box 12 (Code) and also entered $3650 separately on the Let's enter your HSA contributions screen, that would equal $7300 which is $550 over the maximum allowed HSA contribution for a family plan ($6750).  This results in the Form 5329 (Additional Taxes).

This should remove Form 5329 generated by the above-described error.

Double check your W-2. If you have an entry in Box 12 with a code W, then go to the HSA Contribution screen delete the entry, unless you made other HSA contributions besides through your work.

Please follow the instructions below for editing your HSA contributions below if you are using TurboTax Online (except Home & Business version):

1.       Click on Federal

2.       Click on Deductions & Credits

3.       Look in your list for HSA, MSA Contributions and go to step 6; otherwise, continue to step 4

4.       Click on Jump to full list

5.       Click Show more next to Medical

6.       Click Start/Edit next to HSA, MSA Contributions

7.       Follow through the prompts, when you get to the screen that says Enter Your HSA Contributions, you can put additional contributions made after-tax from your own funds (take-home pay, savings, etc.) as All Other Contributions.

8.       This page will automatically pull in your W-2 contributions from you and your employer that were pre-tax.

9.       Complete the rest of the related interview questions

[blue1]

1. that $4,144 is the one that shows on W box on my W-2 form.
2. I did not re-enter that amount on the box anywhere else besides the W-2 field.
3. I put down my 1099-SA (distribution) $4,219
4. I contribute outside my employer, and only $600, that's what I put.

I finished the interview, nothing seems wrong, and it still shows like this:
"Tax-free employer contributions $4,144 Excess employer contributions withdrawn $4,144"

Seems like a bug to me. I delete my HSA 1099-SA, didn't change anything. Should I delete my W-2 entry and start over? (waste of time tho).

[blue1]

OK, I delete my W-2, I deleted my 1099-SA, and it shows my contribution and distribution are $0, but yet, the excess employer contribution withdrawn, still $4,144 ... something is definitely wrong with it, why it stuck there?

[MichaelDC]

OK, You're doing all the right things. Almost finished. If you're within the limits but you're getting the excess HSA contribution message, it's most likely because you answered the eligibility questions incorrectly. To recap, the HSA eligibility requirements are:
• You must be enrolled in a high deductible health plan (HDHP).
• You can’t be enrolled in Medicare or another secondary health insurance policy.
• You can’t be claimed as a dependent on somebody else's return.
To review your answers, step through the HSA interview again (an easy way to get there is to search for HSA in your in-program search box, then click the "Jump to" link in the search results).

[blue1]

Did not work Michael. I have deleted all. Jump into HSA, redid the interview and make sure all answered correctly. The 4,144 still stuck.

[MichaelDC]

Sorry for asking again. Did you say **YES** to having an HDHP? The rules for opening an HSA account is that your insurance policy must be a High Deductible Health Plan (HDHP). If it was through your employer, it probably was an HDHP. If you answered "no" to that question, then TurboTax is alerting you that you overfunded your HSA.

[blue1]

I answered YES for that question. Correct.

[MichaelDC]

That's correct. Any chance there is some mix up with your spouse? Either on a W-2 or the HSA questions.

[MichaelDC]

Also, just to cover all the bases. HSA distributions (money taken from an HSA account) are nontaxable, but only if the money is used to pay for qualified medical expenses. If the money is used for anything else, it's taxable.
After you enter your 1099-SA form, you'll be asked "Did you spend all the money you took out on medical expenses?" (This refers to the Box 1 amount on the previous screen.)
If you answer ***Yes***, the entire distribution is nontaxable. But if you answer No, the portion you didn't spend on medical expenses is taxable income which appears on Form 8889, line 16 and is transferred to line 21 of your 1040 form.

[blue1]

No, I did everything carefully and correctly. My spouse has no contribution nor W-2, and all of her collumn is zero. This 4144 is on my line. I guess I'll just delete this and start everything over...