Question Regarding HSA Penalty Due to Excess Contributions

[Rockpowwer]

TurboTax is showing a penalty for excess HSA contributions, but I’ve confirmed with my employer that both personal and employer contributions for myself and my spouse are within the limits for 2024. 

Can you help me understand why TurboTax is flagging this, and how I can resolve it?

[DawnC]

You may have doubled up your contributions or chose the wrong plan type.   We recommend checking the HSA entry screens to make sure the excess contribution wasn't due to an entry error. Here's how:

1. Open or continue your return.
2. Navigate to the HSA section:
   • TurboTax Online/Mobile: Go to HSA.
   • TurboTax Desktop: Search for hsa and select the Jump to link.
3. Answer the questions until you get to the Let's enter your HSA contributions screen.
4. Make sure you didn't accidentally re-enter the amount already listed (from box 12 of your W-2) as this will incorrectly double your total contribution amount.
5. Continue through the HSA screens, making sure you 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?

For 2024, the maximum combined total that you, your employer, and/or any other eligible person can contribute to your HSA account is:

• $4,150 if you're under 55 at the end of 2024 and are covered by an individual (self-only) HDHP;
• $8,300 if you're under 55 at the end of 2024 and are covered by a family HDHP;
• $5,150 if you're 55 or older at the end of 2024 and are covered by an individual (self-only) HDHP;
• $9,300 if you're 55 or older at the end of 2024 and are covered by a family HDHP.

If you are on separate plans, see Spouses on Separate Plans in Why am I showing an excess HSA contribution?

[Rockpowwer]

Thank you @DawnC 

My box 12c has code W and the amount is $3800. So it’s under all the limits you’ve mentioned. That’s good. 

next, on the HSA screen it seems like I need my 1099-SA to continue before seeing any amounts ?

not sure it was clear, but the penalty showed up right after I’ve added my W2. Which was the first step in my return. So I didn’t get to do anything else. That’s why it was odd that only from this low $3800 amount it seems to think it’s above limit. 

[RobertB4444]

How old are you?

@Rockpowwer 

[Rockpowwer]

I am 40. The HSA is for family, but since spouse is unemployed it is only on my name via employer HDHP plan. Spouse does not have a separate HSA. Employer contributes to my saving account as well as I do. 

[RobertB4444]

Ok, thank you.

When you go through the HSA section and answer all the questions about whether you had a high deductible health plan and all of that then the penalty that showed up right after you entered the W2 should disappear.

@Rockpowwer 

[Rockpowwer]

Ok thank you. That did it ! I don’t see the penalty anymore. 

Minor question: if spouse is unemployed without a separate HSA account l, this question should be answered with None?

what plan did your spouse have during 2024?  

im assuming its not asking about my plan but if she had a separate one ?

[DawnC]

Correct.  For your spouse, the correct answer is None.   HSAs are individual accounts and can only be owned by an individual.   Your HDHP plan can cover her, so your plan is Family, but you are the only owner of the HSA account.   

[Rockpowwer]

Got it. Thank you so much. 

[CatinaT1]

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