Form 8889 and 1040 taxable income?

[Elsie3]

When I enter the HSA interview checkbox showing i am eligible for HSA High Deductible plan and my W2 box 12 d code w of $1800 is added to 8889, that exact amount is carrying over to 1040 line 8 as additional income. I have read threads and not understanding why this is still being considered as taxable income.  I understand 12d code w includes both employer and employee contributions and that the overall w2 box 1 does not include the HSA contributions. However, how do i make TT remove this HSA amount from being taxable on 1040 line 8?

[LindaS5247]

To eliminate this double entry, follow the instructions below for entering your HSA contribution.

 Keep in mind (Step 4): Don't re-enter the amount in the HSA section of TurboTax that is already listed (from box 12 of your W-2) as this will incorrectly double your total contribution amount.

To enter your HSA contributions into the 2024 TurboTax program, you can follow the instructions below. 

1. Open your return in TurboTax.
2. Go to the HSA section as follows:
   • If you are using TurboTax Online/Mobile click on HSA.
   • If you are using TurboTax Desktop, enter "HSA" in the search bar and select the Jump to link.
3. Answer all of the questions until you get to the screen that says, "Let's enter your HSA contribution"
4. Note: Don't re-enter the amount already listed (from box 12 of your W-2) as this will incorrectly double your total contribution amount.
5. Make sure you continue through all of the HSA screens and have answered all questions correctly.
   • If you overfunded your HSA last year but withdrew the excess by the due date of your 2023 return, answer No to Did you overfund your HSA in 2023?
   • Ensure that you have answered the question "Were you covered by a High Deductible Health Plan (HDHP) in 2024; "yes" if you were covered by an HDHP during at least one month during 2024.

Please click here for more detailed information regarding HSA contributions.

[Elsie3]

Thanks for the details. Im sorry I should have mentioned, i have already filed and govt accepted the return and now I have to do via amendment.  I have already fixed one portion of my taxes via amendment bc it was related to the child tax credit.  Can you help me understand if I can fix this HSA issue via amendment too, if so what would be the steps for that? Im not real familar with the amend steps and screens within turbotax. 

Also, you said "To eliminate this double entry, follow the instructions below for entering your HSA contribution.  Keep in mind (Step 4): Don't re-enter the amount in the HSA section of TurboTax that is already listed (from box 12 of your W-2) as this will incorrectly double your total contribution amount. " 

I dont understand where it is doubled?  I know the 1800 is in the form 8889, line 9 and 11, but where is it also at?   You said "dont reenter the amt in HSA section that is already listed"...listed where? Where is this amount already listed? 

[BillM223]

The code W amount in box 12 on your W-2 is considered income ONLY if you made excess contributions to your HSA.

Did you go through the HSA interview and see an error message about excess HSA contributions?

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 how many months
• your spouse's HDHP coverage and for how many 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 2018 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 2024 are:

• $4,150 - individual with self-coverage
• $8,300 - 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 had. Be sure to answer the questions on the screen entitled "Was [name] covered by a High Deductible Health Plan in 2024?".

Fourth, if you had a carryover of excess contributions from 2023 then this carryover is applied to 2024 as a personal contribution, which could cause an excess condition in 2024 as well. But note: if you had an excess contribution in 2023 but cured it by withdrawing the excess in early 2024, then do NOT report an "overfunding" on your 2024 return.

Fifth, the Family limit ($8,300) is for the aggregate of contributions by both taxpayers, even if both taxpayers have their own HSAs. That is, one taxpayer can’t contribute $8,300 to his/her HSA and the other contribute $4,150 to the other HSA – the $8,300 limit applies to the aggregate of all HSA contributions credited to the family.

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