Hi Turbotax,
Can you help?
I’ve mistakenly made TY2024 excess HSA contributions. I’m unmarried, working, and fully covered by employer health insurance. But, at age 70, I’ve begun taking Social Security. SSA mandates that I also take Medicare Part A. They have backdated start of Part A to February 1, 2024. That makes me ineligible for HSA contributions after January 2024.
In other posts here, you advise NOT to withdraw excess contributions until TurboTax calculates how much to withdraw. In my case, I already know exactly how much I contributed for 2024, and I’ve stopped payroll deductions. I also know the month that I became ineligible.
I want to withdraw the 2024 excess contributions before the end of 2024, and report everything with my TY2024 return.
Using TurboTax 2023 (CD Desktop/Mac) and a copy of my 2023 tax file, can’t I use TurboTax to determine my contribution limit is for TY2024, and calculate the amount of excess contributions to withdraw? To do that, I would only need to update a few 2023 entries (in the TY2023 file) to reflect 2024 amounts. Then, Turbotax would calculate the withdrawal the same way it would have if I waited to enter the same data on my 2024 return.
Can you advise if this method is valid?
-- Open copy of my 2023 return. Go to Forms mode.
-- Enter my Total 2024 HSA contributions on W-2, box 12. That amount flows to Form 8889, line 9.
--On Form 8889, Line 3 Smart Worksheet, select “Self-Only” coverage for January. “None” for the months of February – December. Then, override the IRS 2023 HSA limit (of $3,850) and change that to the IRS 2024 HSA limit of ($4,150).
--TurboTax then calculates my pro-rated 2024 HSA contribution limit. The amount is shown on Form 8889, Lines 3 through 8.
--Switch to EasyStep and update answers for all questions within the “HSA income section.” TurboTax calculates the exact amount that I need to withdraw. I confirm that the amount will be withdrawn, and TurboTax removes those excess contributions from the return.
--After completing the EasyStep HSA interview, return to Forms mode. Form 8889 is finished.
--I can now contact my custodian and withdraw the exact amount needed for return of excess contributions.
The calculation with numbers is as follows:
Total 2024 HSA Contributions (payroll and company incentive amount): $4,140
(less) 2024 HSA Maximum Contribution Permitted (One Month/Jan 2024 only): $ 429
Excess HSA Contributions to be withdrawn: $3,711
Can you offer insight on this? Are there other factors to consider?
Thanks in advance.
tom5411051
