How can I get money back? I just realized turbo tax has been filing form 5329 in error for years?

[Blessed1]

I never contributed over my allowable amount to my HSA and I haven't contributed at all since 2014 but upon review, I realized turbo tax has been forwarding the same wrong information about an excess contribution automatically from previous years and I have been paying the same penalty over and over.

[BMcCalpin · Accepted solution]

I don't have enough information to know if the excess contribution in the earlier year was valid or not, nor do I know if the excess was carried to subsequent years. 

However, if you have determined that there was no excess and it should not have been carried over (see the comment below on how this might happen), then to recover your money, you need to amend your previous returns.

Unfortunately, you can amend only the three previous years (unless you get a letter from the IRS telling you otherwise), so if you amend your returns before April 15, 2019, you can amend years 2015, 2016, and 2017.

***how carryovers are accidentally propagated***

There is a question in the HSA interview that asks "Did you overfund your HSA in [the previous year]?" If you withdrew all your excess in the previous year, then you should answer "no" because what TurboTax really wants to know is "Did you carry over any excess contributions from the previous year?" When the taxpayer innocently answers "yes" and enters the amount overfunded rather than the amount actually carried over (i.e., the excess minus whatever you withdrew from the HSA in the previous year), then this creates a "personal" HSA contribution in the current year, which can create another excess contribution situation.

If you did this, then please amend your prior tax returns for 2015, 2016, and 2017.

***How to Amend***

Please see https://ttlc.intuit.com/replies/3288565

[Blessed1]

Is overfunding determined by the amount in the HSA?

[BMcCalpin]

No. Excess contributions are when you contribute to your HSA more in a year than the annual HSA contribution limit for your circumstances. The limit is indexed to inflation so varies slightly each year and it also depends on whether you had Family or Self-only HDHP coverage, how many months you had HDHP coverage, etc. TurboTax calculates this automatically based on your answers in the HSA interview.

It does not matter how much you actually have in the HSA at any time nor does the limit depend on hwo much your distributed (i.e. spent from the HSA). In fact, "overfunded" is not the word I would use, precisely because it leads taxpayers to believe that they have too much money in their HSA when, in fact, there is no limit to how much you can have in the HSA, only a limit as to how much you can contribute in any given year.

[Blessed1]

I just filed 2018 a couple hours ago, is there anyway to catch it and change it?

[Blessed1]

I just filed 2018 a couple hours ago, is there anyway to catch it and change it?

[BMcCalpin]

Once a return is accepted, it is too late to change it. If the return is rejected, then you can open the return to fix the problem and also change the contribution problem, then e-file it as if for the first time.

But the likely case is that the return is already accepted and you will have to amend 2018 as well.