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Reno
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The software is saying that I have an HSA contribution excess of $1000. But my employers entire contribution was $1000 for the whole year and I did not contribute.

I should be under the HSA limit of $3400. Why is it saying I'm $1000 over?
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The software is saying that I have an HSA contribution excess of $1000. But my employers entire contribution was $1000 for the whole year and I did not contribute.

The first things that come to mind are:

1. one of the two numbers in your question is a typo - did the employer contribute $100 or $1,000?

2. The employer's contribution should appear in your W-2 in box 12 with a code of W. On the W-2 page (Federal->Wages & Income->Jobs(W-2)), did you enter the number correctly?

3. Did you have an excess contribution from 2016? This could carryover automatically if you did your 2016 taxes in TurboTax, and the software carried your data over automatically. Conversely, you could have answered the excess contribution carryover question in the HSA interview incorrectly.

The following are other very common reasons for an unexpected HSA excess contribution:

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

As you 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.

In Summary, go back through your W-2 and the HSA interview and recheck all your answers. Worst case, delete and re-add your W-2 and the forms 8889-T (and -S, if one), as well as form 1099-SA. In the Online version, do this by going to the left and clicking on Tax Tools, then navigating to Tools->Delete A Form.

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