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If this was your experience, then everything is OK - the IRS sees this treatment of excess contributions a lot.
But I am not sure what you meant by "I pre-deducted it on last year's return by hand". Excess contributions aren't "deducted", they're added to your income, and with TurboTax makes the adjustment for you, so you don't need to.
If this was your experience, then everything is OK - the IRS sees this treatment of excess contributions a lot.
But I am not sure what you meant by "I pre-deducted it on last year's return by hand". Excess contributions aren't "deducted", they're added to your income, and with TurboTax makes the adjustment for you, so you don't need to.
I have a related question on this. What happens if you don't withdraw the excess and just pay the extra 6% tax? I thought this would just be easier as it was a small amount in my case but I'm confused on how TurboTax is handling it on my CA tax return. It almost seems like TT always thinks it's withdrawn maybe?
For 2019, my w-2 (box 12c Code W) reported amount X for HSA contributions and my 5498 reported X+Y amount. My employer made an extra Y contribution when transitioning to a different company so that explains the difference. I was only in HDHP for 3 months so that exceeded my HSA pro-rated contribution limit for the year. I'm using Turbotax and reported that my employer made an additional contribution etc. and everything works out fine in my Federal taxes as the extra Z amount over my HSA pro-rated limit was added as income and taxed appropriately with extra 6%.
However, for my California Adjustments, I see the amount Z (that exceeded my pro-rated contribution limit) in Row 8f Column B as a SUBTRACTION. Should it be a subtraction? The filled-in description for the row says "HSA Distributions", which it wasn't technically. Is this correct? Additionally, I see Row 1 Column C to be X+Y, not just the X reported in my W-2. Is this correct?
Thanks.
The excise tax applies to each tax year the excess contribution remains in the account. So, if you do not withdraw the excess contribution, you will continue to be assessed the excise tax.
You may withdraw some or all of the excess contributions and avoid paying the excise tax on the amount withdrawn if you meet the following conditions.
It looks like something may have been entered on your Federal return that could be carrying to your state return. Review your HSA entries.
Under the Deductions & Credits menu, confirm the following:
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