Hello, I'm in a bit of tangle on excess HSA contribution and will like to hear more from the community how to go about this from tax purposes:
I'm currently enrolled in a High Deductible Family plan (me and my wife) and qualified for HSA contributions. My employer contributes $2,000 to the plan and I add on the rest to reach the family limit.
In February 2021, my wife applied for Health Insurance but it is a not High Deductible medical plan.
In 2021, I've contributed the family max of $7,200.
In 2022, I've contributed the family max of $7,300.
When filing for turbo tax recently for the year of 2022, I found that the IRS rule limits me to only INDIVIDUAL max instead of FAMILY max due to my wife's Health Insurance being a non-HDP plan for the years of 2021 and 2022. I'm in a bit of a tangle to sort this out now. Based on what i've read online and in various forums, I'm thinking of making the following actions to resolve this and see how others will go about this:
1) For the tax year of 2022:
Since I still have time before the tax deadline (April 18th), I'll make an excess contribution withdrawal request to my custodian for the year of 2022 of the amount of ($7,250) . That will leave me with a contribution of 2022 of $50 dollars since I've contributed the max of $7,300. This should be okay because in 2021, my contribution was over by $3,600 so automatically rolling over the 2022 the ($3,600+ $50 (after withdrawal)) should reach the INDIVIDUAL limit. Thereby removing the 6% excise tax on the year of 2022. Please correct me here if that's not the right step.
2) For the tax year of 2021:
For the excess contribution year of 2021, since I didn't know about the limit I will need to do an amend for that year by filing a Form 5329 of the extra contribution and pay taxes of 6% excise tax for that year. Is this a correct solution move going forward?
Turbo tax:
If the 2 actions above for year 2022 and 2021 are correct, I'm a bit stuck in terms of how to fill the HSA portion in TurboTax. I've contributed $7,300 and I cannot change that. I also not sure how to report the automatic rollover from 2021 to 2022 in turbo
Thank you for your time and appreciate your guidance here, community! I hope i can get the 2022 and 2021 fix before the tax filing!
