BillM223
Expert Alumni

Get your taxes done using TurboTax

It is not true that TurboTax cannot handle your situation, as seemingly complex as it is. It just doesn't come up with the answer that you want.

 

If you look at the instructions for form 8889 (especially line 6), you will see that the IRS does not handle the calculations for excess contributions in the same way as you think.

 

Especially, note that the TurboTax transfer of the 7,750 Family limit back and forth between the spouses in order to minimize the excess - that's how TurboTax got the excess down to 703.

 

Also note that the 1,000 bonus for your specific HSA (because of your age) must go only to your HSA - it can't be part of the back-and-forth.

 

I asked you before where you go the idea that your excess was 2,153 and I did not see an answer. Because you have made this withdrawal, you now have a problem.

 

You can withdraw as excess contribution only the amount that is actually in excess. The HSA is not a simple savings account from which you can willy-nilly take money out; instead there are specific rules that you have to follow.

 

So what you have done is withdraw (1) your excess contributions of 703 and (2) withdraw 1,450 for reasons other than for qualifying medical expenses. As such, if you can't find current medical expenses to apply that 1,450 to, TurboTax will add that 1,450 back to income as well as penalizing you 20%. Alternatively, you can see if your HSA custodian will accept your request that the 1,450 was a Mistaken Distribution, and let you send those dollars back to the HSA.

 

Note that the custodian does not have to accept this (which will save you a lots of money and trouble), so be nice, and even grovel if needed.

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