HSA Excess contribution error

[Shiftslayer]

By $2500 dollar limit, I mean I limit myself to $2500, that's all that goes in yearly as it's pre-set up by my employer to be taken out of my pay. I know I have a higher limit. There are no prior excess contributions, no rollovers, etc. nothing has changed year over year other than the reply by the software that my max contribution is $0, which I know to be incorrect. In fact, my limit should have increased as I had a child in 2024 and switched to a high deductible family plan.

[BillM223]

"I have a $0 contribution limit."

Do you see this message in the screen where you enter your month-by-month HDHP coverage? Where there is a button that says "Calculate Max Contribution Limit"?

If so, yes, that calculation should be ignored. We have reported that in many cases, this calculation is incorrect. However, the fact that the screen gives this value in error, does not affect the accuracy of the numbers on the 8889 or 5239 or anywhere else on the return.

[vahap]

Whoever is having this error make sure to select the question if you had HDHP "YES" this will solve the issue.

[daniels190]

That still does not fix the issue. I am using the desktop version and it is saying that I had excess contributions but I did not. It is saying my whole amount ($8293 for family plan) contributed was excess. Is this a standard bug? And how do I make sure I am not getting charged 6% on the "excess contribution" that is not actually in excess?

[MarilynG1]

If you had a Family HDHP Plan and also an HSA Account, on the very first page of the HSA interview, make sure you checked the boxes indicating that.

Don't indicate that your wife had HDHP coverage or an HSA (she is covered under your family plan). 

Since we can't see your return in this forum, we're focusing on common errors.  

Because TurboTax is saying that your entire contribution is 'excess', somehow you are indicating that you're not eligible to contribute.  

Here's more info on Excess HSA Contribution.

@daniels190 

[daniels190]

This is on the turbotax desktop version. I think that it must look different than described because I don't see the same things when you are discussing the "HSA interview". Can you please help with the desktop version? Thank you.

I did go back and say that my wife didn't have insurance since it is through me and that seemed to help. 

Thanks

[AnnetteB6]

The HSA interview section using the desktop version of TurboTax is all of the questions that you answer by going to Deductions and Credits > Medical > 1099-SA, HSA, MSA and clicking Start or Update.

If your contributions were made through your employer and they were reported on your W-2 in box 12 under code W, be sure that you do not enter them again in the HSA section.  

@daniels190 

[strental]

We had a HD family plan and contributed $4,538 via payroll deductions (reported in W-2 and includes both employer and employee) and $5,000 via ACH; totaling to $9,538. My spouse is over 55 and limit is $9550.  However, Turbotax thinks we had excess contribution of   $4.526 and asking if we will withdraw the amount prior to April 15, 2026.  We have a desktop version.  There is a screen for "Lets enter HSA contributions" which brings the 2025 employer and payroll cont. as 4538 (It says Box 12 of your W-2) and cont. personally made as 5000. Shall I remove the amount in first box so that it will not double count it?

[BillM223]

No, you can't change the contribution amount in the first box of the "Let's enter [name]'s HSA contributions" screen - it comes from code W in box 12 on the W-2. The number with code W in box 12 on the W-2, also should not be changed, since this reports the amount of HSA contributions that your employer reported going to your HSA custodian. 

Typically, a taxpayer in your situation shows excess contribution when they double reported their own contributions, both as payroll deductions (code W in box 12 of the W-2), and also as "personal" contributions made directly to the HSA.

No dollars that rightly belong with the code W amount should be reported anywhere else on the return. Thus, if the code W amount contains contributions made by both the employer and the taxpayer, then this number must not be changed.

The term "employer contribution" confuses most taxpayers. It does not refer to the source of the dollars, but to how the dollars were handled. For example, the code W amount is removed from Wages in boxes 1, 3, and 5 on the W-2. Yes, this means that "employer contributions" are not subject to federal income taxes, Social Security taxes, nor Medicare taxes. This is as opposed to the "personal" HSA contributions that appear on line 13 on part II of Schedule 1 (1040) - these are removed from your taxable income, so not subject to federal income taxes, but they are subject to Social Security and Medicare taxes.

For this reason, it is better for most taxpayers to contribute via their employer through payroll deductions (the code W amount), and not by check or ACH transfer. Indeed, it is common for most taxpayers to contribute most of their annual amount by payroll deduction, and to make a personal contribution at the end of the year when they know how close their contributions are.

So please look at the second paragraph, and see if this is what you did. The second line on the "Let's enter [name]'s HSA contributions" screen should contain ONLY those dollars that you send directly to the HSA, not through your employer.

@strental