Overcontribution to HSA in 2019 showing up on total income even though I have withdrawn/rolled over to 2020

Forum|Forum|6 years ago
July 15, 2020
5 replies
22 views

Hi,

I had changed employers due to which I over contributed to my HSA by about $1300. Now this amount shows up as 'Other income' in my Total Income. My entire tax breakdown for my income for 2019 is showing this amount added. Meaning my gross income for the 2019 includes this excess amount in the calculation.

Why is the TT software doing that after I have confirmed that I have removed/withdrawn the funds (in reality rolled over this excess amount to the year 2020 with my HSA provider)?

Is this going to affect my Federal/State taxes?

Thanks,

Ani

BillM223

Level 15

Most taxpayers contribute to their HSA through their employer (see code W in box 12 on your W-2).

The code W amount includes both your employer's contributions and your contributions through payroll deduction.

The code W amount is removed from Wages in boxes 1, 3, and 5 before the W-2 is printed.

Since the excess amount is not deductible, this amount of the excess has to be added back to Other Income because it was already removed from federal income and now we realize that the excess should not have been.

This happens whether or not you carry over the excess to the next year.

You may be able to deduct it in 2020 (if you reduce your other HSA contributions), you just can't deduct it in 2019.

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AS3Author

Level 2

@BillM223

I still haven't gotten this question resolved, I am afraid 😞

Does adding this excess contribution to 'Other income' mean I paid tax on it (this excess contribution) in 2019 ?

Opus 17

Level 15

@AS3 wrote:

@BillM223

I still haven't gotten this question resolved, I am afraid 😞

Does adding this excess contribution to 'Other income' mean I paid tax on it (this excess contribution) in 2019 ?

Yes, if you removed the excess contribution, it is added to your taxable income. This is correct because it was not included in your taxable income W-2 box 1. The disallowed contribution is added back to your taxable income because it does not qualify as a tax-free contribution.