Excess HSA Contributions Confusion

[user17754371289]

Hello,

A portion of my HSA contributions come from a monthly insurance premium pass through. Apparently, there was an extra bonus contribution in 2025 for opening a new HSA but I was not able to get information regarding this contribution until it was too late to adjust me own to make up for it. As a result, I ended up going over for the year in my total contributions. However, this does not show up in my W-2 since it did not come from my payroll deductions. It is only visible through bank documents. I submitted a form to withdraw the excess amount (plus calculated earnings) and received the distribution in March 2026 but apparently I will NOT receive an 1099-SA until early 2027 since the distribution occurred in 2026. I am getting conflicting information on what (if anything) I need to report on my 2025 taxes and how. Because it doesn't show up on the W-2, I am not getting prompted about excess contributions. In the questionnaire there is a 'overfunded their HSA last year' option which appears to pertain to 2024 so not relevant. There is also a 'other company contributions that weren't reported to their W-2' which seems promising but the live advisor I spoke with swears I do not need to do anything and should just wait until I do 2026 taxes. Does anyone know what I'm supposed to do?

[BillM223]

You need to add the pass-through amount to the "personal" contributions line on the "Let's enter [name]'s HSA contributions" screen. This field is for all contributions not made through your employer (as shown by the code W amount in box 12 of your W-2). 

When TurboTax sees this new contribution and triggers the excess contribution message, you will be asked whether the excess came from employer contributions or personal contributions. The difference is that excess contributions made through your employer get added back to income (because the code W amount is removed from Wages in boxes 1, 3, and 5 on your W-2 when the W-2 is printed). The excess personal contributions just get removed from what would have been your HSA deduction on line 13 on Schedule 1 (1040).

Yes, you will not receive the 1099-SA until some time between now and January 2027. That's OK. TurboTax will automatically take care of your 205 return, and when the 1099-SA shows up, only the earnings in box 2 will be added to income on your 2026 return.

[user17754371289]

Thank you so much for your reply! I feel like I am finally getting closer to an answer but I am still a little confused.

If I understand you correctly, you are advising that I enter the remaining $1080 in contributions currently unaccounted for as 'contributions personally made (not through employer)'. For additional context/clarification, this results in a summary window that shows a $1000 deduction but no listed excess contributions (though I do get a prompt asking if I want to withdraw the excess funds). I will also note that I was never prompted to specify if the excess contributions were personal or employer, but since they don't show up as 'excess company contributions' in the summary window, it seems they are deemed personal.

What confuses me is that these are NOT in fact personal contributions but contributions made by the insurance company. I've been doing some additional digging and the instructions for line 9 of Form 8889 state that 'contributions made by a health insurance plan on an employer's behalf' should be included as employer contributions. Why they aren't on the W-2 somewhere (e.g., box 14) is still unclear but this is what made/makes me think that the additional $1080 should be entered under the 'Do any of these situations apply' screen as 'other company contributions that weren't reported on their W-2'. Plus, for what it's worth, Gemini also thinks it should be reported in line 9 of Form 8889 when I ask specifically about my health insurance (G.E.H.A.) HSA contributions (but I always take those responses with a grain of salt). Doing that results in a summary with no deduction, $4300 tax-free company contributions (which tracks since the insurance contributions are also tax-free to my understanding), and $80 excess company contributions (and a smaller rebate).

Any additional guidance/resources that can help me make sense of the 'personal' vs 'employer' distinction here? (For what it is worth, the bank designates the insurance contributions as 'employer' but for some reason designated the 'bonus' $80 that caused all the problems as 'personal'.)

On a related note, if I follow through with your initial suggestion, I get an error that requires me to enter a year end HSA value. Does this need to match the value I used for my withdrawal calculations (which is a bit more than the the end of year value they are requesting)?

Interestingly, if I follow through with the second scenario, I also get an error but it's wanting me to enter a year end Roth IRA value but nothing about the HSA value, which seems like it has to be a bug.

Thanks again for your help. 

[BillM223]

"Any additional guidance/resources that can help me make sense of the 'personal' vs 'employer' distinction here?"

"Employer" contributions are any contributions made through the employer (i.e., the code W in box 12 on your W-2), no matter what the source of the dollars was. "Personal" contributions are all other contributions, i.e., not made through the employer, not matter what the source was.

This is the IRS' terminology and it causes no end of confusion. 

Simply put, the contributions on your W-2 are removed from Wages in boxes 1, 3, and 5 on your W-2, while the other contributions are shown on line 13 on Schedule 1 (1040).

So if your excess contributions are from the "personal" contributions, then there is no adjustment to the "employer" contributions on the HSA Summary, but only to the personal contributions on lin13 on Schedule 1 (1040< which will be reduced by the excess.

When you get the excess message from TurboTax, you will be asked if you want to withdraw all of it, some of it, or none of it. If you don't withdraw all of it, the balance will carry over to next year. You will be dinged a penalty of 6% of either the excess or the value of your HSA on December 31, 2025, which ever is smaller. This is why you are asked about the value of your HSA.

A similar thing is true for your Roth IRA - TurboTax is calculating a penalty, probably for excess contributions to your Roth IRA, but there are many more ways to deal with IRAs so I won't speculate more than that.