How do I record excess contrbutions for my HSA in TurboTax

[KS53]

I signed up for Medicare Part A last March (23).  I have an HSA at work.  I found out that you cannot make contributions to an HSA is you have Medicare Part A or B and will have to withdraw the contributions I made since first signing up for medicate.

I contacted my HSA provider and requests that all contributions from March '23 onward be remove.  I also make another request that all contributions I made for '24 be removed as well and I stopped any further contributions.

For'23s taxes I need to record that I made this withdrawal. I only need to deal with the withdrawal of the 2023 contributions.  How do I do this in TurboTax?

Thanks!

[BillM223 · Accepted solution]

When you go through the HSA interview (Deductions & Credits->Medical->1099-SA, MSA, HSA, or similar wording - it varies slightly between the products), you will be asked If You Had Medicare at any time in 2023?

Answer YES, and then you will asked what coverage you have for each month.

TurboTax will use this information to calculate your annual HSA contribution limit, and will apply the contributions found in box 12 with a code of W on your W-2 plus any personal contributions you made. 

TurboTax will tell you that you made excess contributions (I presume). Then it will automatically add any code W amount in excess back to Other Income.

TurboTax will also ask you how much of the excess you will withdraw. Whether you have already withdrawn it, or intend to, say yes. NOTE that the calculated excess may not be the same as what you think it is. Don't worry, it is difficult for taxpayers to calculate the excess correctly, so just go with TurboTax.

The process is largely automatic on TurboTax's part, so please don't try to help. Just acknowledge the excess that TurboTax calculates, and finish the withdrawals. Please tell the HSA custodian that these are withdrawals for "excess contributions". This is important so that their paperwork will be correct.

Any more questions? Then come on back!

[Opus 17]

"will have to withdraw the contributions I made since first signing up for medicate"

That's not quite correct.

If you enrolled in Medicare on March 1, then you were eligible to make HSA contributions for 2 months.  Your contribution limit for 2023 would be $1483 if you are covered by a family HDHP, or $792 if you were covered by a single HDHP.  However, contributions can be made at any time during the year, even after you enroll in medicare, as long as the total is not more than I indicated.  For example, if you contributed $100 per month and your eligible limit is $792, then you have $408 of excess contributions ($1200 minus $792), not $1000 of excess ($100 per ineligible month).  Of course, if you were contributing the maximum ($729/month) then you would need to remove all the contributions made after your enrollment in Medicare.

[KS53]

Thanks.  This worked perfectly for me.