Turbotax is saying "We see [spouse] had a break in HDHP health plan coverage during 2017" which is not correct. Where can I correct this information?

[BillM223]

The question in prior years (2016 and before) was even less clear, and this fix lacks clarity as well.

Your concerns are noted.

[jknuckey]

Back here again for 2019 taxes.   Any chance this will be fixed next year?

[VictoriaD75]

The question on the page before you see that you had a “lapse” in coverage is causing the issue.

On the previous page you should see the question, “What type of High Deductible Health Plan did [spouse] have on December 1, 2019?”.  The choices are Family, Self only, or None. 

If you have been covered under your husband’s family plan, you might think you should answer Family to the question.  However, the answer should be None. It is referring to what type of plan you held in your name on December 1, 2019.  If you had your own separate HDHP on that date, then choose the type of plan that you had.  If instead you were covered under the plan in your husband’s name, then you should choose None.

To go back to the section of your return to answer the questions again, use the following steps:

• On the top row of the TurboTax  screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
• This opens a box where you can type in “hsa” (be sure to enter exactly as shown here) and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
• The search results will give you an option to “Jump to hsa”
• Click on the blue “Jump to hsa” link and edit your information

Or in TurboTax Online,

Under the Deductions & Credits menu, confirm the following:

• Expand the menu for Medical
• Click Start/Revisit next to HSA, MSA Contributions

[madk]

This answer has been posted at least 3 times in this forum, including the very first answer, so re-posting it contributes nothing to the discussion. 

The real problem is why Intuit refuses to update the help or the dialog to make it easier to understand.

[Your username must be at least t]

Not only has it been posted repeatedly, but the answer seems to be incorrect. I was covered by a HDHP, under my own name, chose "Family" and still TT thinks there was a break in coverage. Issues like this, which require slogging through the internet for hours every year to solve, is why I have a love/hate relationship (currently in the hate phase) with TT.

[morning_aura]

Holy confusion, Batman! I even remembered that there was something wacky about this question that was counter intuitive and still made this mistake and had to look up the answer here. All it would take is a bit of explanation on the page along with the main question to make this so much easier. Which, isn't that the whole point of using TurboTax instead of just filling out the form yourself?

[BillEb]

I've tripped up on this a few years in a row.  It's 2021 and I find it difficult to understand why it's not fixed.

I cover myself and our children under my Family High Deductible Health Savings Account.  My wife covers herself under her Individual High Deductible Health Savings account.  We understand that our combined contributions can't exceed the limits.  Why can't TT fix this?

[hantangma]

I already selected family plan on my portion of HSA. The turbo tax should not ask this question on my spouse's portion.

[BillM223]

Your issue is with the question that asks "What type of High Deductible Health Plan did [name] have on December 1, 2019?"

Unfortunately, the question does not clarify that it is only for a small group of taxpayers and that all other taxpayers should answer "NONE".

NOTE: each spouse can have an HSA. The use of "you" below refers to whichever spouse's name was in the question above.

This question is trying to determine if you utilized the "last-month" rule in 2019 (yes, 2019). The last-month rule lets you use the full annual HSA contribution limit if you had HDHP coverage on December 1, even if you were not covered by an HDHP for all of the year.

However, the catch is that if you used the last-month rule, the IRS requires that you stay under HDHP coverage for all of the following year (2020).

***NOTE*** This question occurs on the taxpayer who does not have an HSA, so never had a chance to tell TurboTax in the HSA interview what their HDHP coverage was for 2020.

So, the fix is this: go back to the question (at the end of the HSA interview), and:

• If you had HDHP coverage for all of 2019 , then enter NONE 
• If you had no HDHP coverage for all of 2019, then enter NONE.
• If you did not have an HSA in 2019, then enter NONE.
• If you had an HSA in 2019 but did not contribute to it in 2019, then enter NONE.

Only taxpayers who had their own HSA in 2019 AND who contributed to their own HSA in 2019 should answer “Family” or “Self” or “None” (which can be the right answer in some cases).

P.S. having a Family HDHP policy does not guarantee that your spouse was under it. The "family" could have been you and a dependent - this happens often enough when the spouse has separate non-HDHP insurance from his/her job.

[smily03]

Does TT even monitor their forums for stuff like this? Same issue this year, talked to TWO different turbotax reps today who didn't know what the deal was, one of whom even gave incorrect advice based on what's in here. TT Please Fix This Issue! Overall I like your software but this is really really confusing/misleading!

[cpruitt235]

Still a problem in 2022.  

[JamesH13]

Still a problem in 2023

[CarissaM]

It would be best to give us a call here, so we can better assist you with this. @JamesH13 

[vidiheho]

I have updated the information to "none" as is explained, but turbotax is still stating that we have overfunded our family hsa account, and we will be taxed 6% for the excess contributions.  How do I fix this so that we aren't being taxed for the non-existent overfunding of our hsa?  

[BillM223]

"I have updated the information to "none" as is explained, but turbotax is still stating that we have overfunded our family hsa account," - The answer above is in reference to a different issue: when you are told that your HDHP policy had lapsed.

The answer below is appropriate for taxpayers who are told that they have excess contributions.

How to fix over contributions to your HSA for 2022

It is possible to accidentally indicate to TurboTax that you made excess HSA contributions when perhaps you haven't.

I understand that the following list is long, but these are all reasons that taxpayers get excess contribution messages.

If you find that your situation is not one of these cases, then please make a new post in which you indicate:

• your HDHP coverage and for which months
• your spouse's HDHP coverage and for which months
• your HSA contributions (both through your employer and directly to the HSA)
• your spouse's HSA contributions (both through your spouse's employer and directly to the HSA)
• the amount of the excess
• whether or not either of you went on Medicare and what month
• whether or not (and the amount) of carryover of excess contributions from 2021 for either of you

***main answer***

One of the purposes of the HSA interview is to determine your annual HSA contribution limit.

As you probably know, the maximum limits in 2022 are:

• $3,650 - individual with self-coverage
• $7,300 - 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.

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 HDHP coverage all 12 months, then the annual contribution limit is reduced on a per month ratio. NOTE, this means that you have to indicate when and under what type of HDHP plan you were. Be sure to answer the questions on the screen entitled "Was [name] covered by a High Deductible Health Plan in 2022?".

Fourth, if you had a carryover of excess contributions from 2021, then this carryover is applied to 2022 as a reduction to the 2022 HSA contribution limit, which could cause an excess condition in 2022 as well. But note: if you had an excess contribution in 2021 but cured it by withdrawing the excess in early 2022, then do NOT report an "overfunding" on your 2022 return.

Fifth, the Family limit ($7,300) is for the aggregate of contributions by both taxpayers, even if both taxpayers have their own HSAs. That is, one taxpayer can’t contribute $7,300 to his/her HSA and the other contribute $3,650 to the other HSA – the $7,300  limit applies to the aggregate of all HSA contributions credited to the family (in this case, the excess contributions would be $3,650).