W2 showing the incorrect HSA Contribution

[Anonymous]

My employer's W2 is showing the incorrect contribution values for HSA contributions. 

The W2 shows a total of 3,600 for my HSA contributions (the legal max), when the real total was closer to 3800. It was confusing this year since we utilized 3 different HSA providers.  What are my next steps? 

[RaifH]

If you had HSA contributions that were not reported on your W-2, you will have to report those as well. Then, to avoid over-contribution penalties and an ongoing headache, it is probably in your best interest to withdraw the excess contributions before April 15, 2022. To do this in TurboTax:

1. Enter your W-2 with the Code W in Box 12.
2. This should have opened an area on your tax return for HSAs. If you do not see it, go to Federal > Wages & Income > Less Common Income > 1099-SA, HSA, MSA and click Start/Revisit.
3. Make sure you have HSA selected.
4. If you made any withdrawals from your HSA, you should receive a 1099-SA and answer Yes to Did you use your HSA to pay for anything in 2021? Otherwise, select No.
5. Assuming you did not inherit this HSA, select No.
6. Under Let's enter your HSA contributions your employer amount should already be in there from the W-2. If you made any additional contributions, enter them here. However, if your employer made additional contributions not reported on your W-2, enter them on the next screen, Did your employer tell you about any other contributions? 
7. Answer the questions on the next two screens, making sure you answer the question related to your HDHP correctly. 
8. After asking about prior year over-funding, the system should alert you that you over-funded by $200 this year and can make the withdrawal by April 18, 2022 in order to avoid the penalty. If you opt to do this, the $200 will populate in Schedule 1 Line 8e as a taxable HSA distribution. You will not pay any penalty.

When you contact your HSA, make sure you tell them the withdrawal is for an excess contribution and to remove any earnings associated with the excess contribution as well. On next year's return, you will receive a 1099-SA for this withdrawal and pay tax on the earnings. It doesn't matter which of the three HSA providers you take the withdrawal from. 

[jazimmer26]

So it seems 2022 TurboTax is calculating the wrong HSA max contribution.   I was on Single HDHP for 11 months and changed my HDHP to a Family HDHP for 1 month of 2022 while my husband switched jobs.   I'm over 55, so the max contribution should be 4650, however it's calculating it to be 4954.  I believe it's adding another 304 for that one month.   Which would be ok, but it's also adding 304 to my husbands max contribution because I had to mark he was on my family HDHP for 1 month, giving him a max contribution of 3954 (he's under 55).  You can't add 304 to both people, either add nothing for each or add 304 to one and subtract 304 from the other person's max.    

[BillM223]

Please clarify the following:

1. What coverage did each of you have for which months? Yes, month by month

2. In which month did you get covered by a Family HDHP policy?

3. Were you over 55 all year? (the $1,000 "bump" gets prorated based on the number of months).

4. How many HSAs did you have (each of you may have one)?

5. "so the max contribution should be 4650, " - this is not true if you have Family coverage for even one month, and which month it is can make a big difference (see #2).

@jazimmer26

[jazimmer26]

I stand corrected, after reading the IRS website, TurboTax is correct. 

We both had single HDHP plans for all 11 months except one, which we had Family. 

I am over 55, my husband is not. 

So the calculation for him is 11mo single (3650 * 11 / 12) + 1 mo family (608) = 3954