Total HSA contribution reported incorrectly, but not exceeding limit. Should I file an amendment? If yes, what are the correct steps?

[YuryP]

I filed both Federal and CA tax returns and later discovered that in addition to my employer contribution pointed in W-2, there was also $75 dollars contribution from bank which manages the HSA and it is not reported in W-2. Even with this addition of $75, total contribution is still below Family Limit in 2020.

Should I file an amendment to Federal and State tax returns?

If yes, how to correctly change the return to get those $75 into the right place  in form 8889.

[BillM223]

"there was also $75 dollars contribution from bank which manages the HSA "

Why did the HSA custodian contribute to your HSA? Did they make an earlier mistake that they were "correcting"? I can't really answer your question until I understand what the HSA custodian did and why.

[YuryP]

"Why did the HSA custodian contribute to your HSA?"

This was a a one-time $75 incentive to "kickstart" the contributions. Not a mistake. More like a welcome bonus.

[MarilynG1]

Save a copy of your filed return and open TurboTax to add the additional HSA contribution. 

If it doesn't change your Refund, you may not need to amend.

Click this link for more info on Do I Need to Amend?

[YuryP]

Could you please let me know, how exactly should I add the additional HSA contribution in Turbo Tax? Where should I enter it?

[SForrestLO · Accepted solution]

@YuryP

If you are talking about an HSA contribution directly to the HSA plan administrator outside of your employer, you do the following:

• Go to Federal Taxes->Deductions & Credits->Medical and click on "HSA MSA Contributions".
• If you see the HSA Summary, click on Edit to restart the HSA interview.
• Proceed through the HSA interview until you come to a screen entitled "Let's enter [your name] HSA contributions" (see screenshot below).
• Enter the additional personal contribution on the second line.

[YuryP]

It was not my contribution. It was contribution from the HSA plan administrator, like a welcome bonus. I explained the situation in full detail in the initial post and further replies.

[BillM223]

Forrest is correct; enter it as a "personal contribution". This is because you, the taxpayer who owns the HSA, has to report all contributions to your HSA from anyone on the planet, except for those from and through your employer. So if your spouse or your Aunt Mae or a random stranger or even the HSA administrator makes a contribution to your HSA, you report it as a "personal" contribution.

The IRS terminology is confusing, but this is what you do.

[YuryP]

OK, got it, thanks. Should I also put it as an additional income? Because if I just put it as a personal contribution to HSA, Turbotax says IRS owes me a refund, which seems wrong (I did take the money out of my pocket and put to HSA, it was 3rd party). If I put the same amount as an additional income, then IRS doesn't owe me and I don't owe IRS.

[BillM223]

"Should I also put it as an additional income? "

No, don't add it as additional income.

The IRS says that no matter who makes the contribution to your HSA, you get the deduction. So in this case, instead of the HSA bank getting the deduction, you get it.