When you saw the screen entitled "Was [your name] enrolled in a High Deductible Health Plan (HDHP) in 2019?" (see screenshot below), did you answer "I was covered by a family plan every month of the year" - that's how TurboTax knows if you have a Family Plan or not.
Once you have checked that, then read the following for other reasons that you might appear to have an excess contribution...
One of the purposes of the HSA interview is to determine your annual HSA contribution limit.
As you probably know, the maximum limits in 2019 are:
- $3,500 - individual with self-coverage
- $7,000 - 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 from Federal Taxes->Deductions & Credits->Medical (click on "HSA MSA Contributions") 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 [name] HSA contributions" screen.
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). Your contributions by means of payroll deductions must not be entered on the second line.
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 2018, then this carryover is applied to 2019 as a personal contribution, which could cause an excess condition in 2019 as well. But note: if you had an excess contribution in 2018 but cured it by withdrawing the excess in early 2018, then do NOT report an "overfunding" on your 2018 return.
Fifth, the Family limit ($7,000) is for the aggregate of contributions by both taxpayers, even if both taxpayers have their own HSAs. That is, one taxpayer can’t contribute $7,000 to his/her HSA and the other contribute $3,500 to the other HSA – the $7,000 limit applies to the aggregate of all HSA contributions credited to the family (in this case, the excess contributions would be $3,500).
#2 is the cause of most unexpected excess contributions.
[Edited 3/17/2020 3:22 pm CDT - updated for 2019]
