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garya-163
New Member

If on my 5498-SA, I had $1,250 total contribution and on my 1099-SA, I had gross distribution of $1,539.96. How was I overfunded? Thanks.

 
3 Replies
BillM223
Employee Tax Expert

If on my 5498-SA, I had $1,250 total contribution and on my 1099-SA, I had gross distribution of $1,539.96. How was I overfunded? Thanks.

The condition is actually "excess contribution", not "overfunding" (yes, I know that word is used and it shouldn't be).

 

You are limited to how much you can contribute to your HSA in a given year (actually, from January 1st of the year to April 15th of the year following).

 

If you exceed that annual limit, the TurboTax tells you that you have "excess contributions".

 

It makes no difference how much money you have in the HSA nor how much you spent out of the HSA.

 

So let's ignore the 5498-SA and the distributions, because they are not relevant to the excess contribution situation, and let's concentrate solely on the excess contributions message that I assume you got.

 

It is possible to accidentally indicate that you made excess contributions to your HSA, even if you didn't. Please see if any of the following situations applies to you.

 

One of the purposes of the HSA interview is to determine your annual HSA contribution limit.

 

As you probably know, the maximum limits in 2019 are:

  • $3,500 - individual with self-coverage
  • $7,000 - individual with family coverage
  • If the HSA owner is 55 or older, then you add $1,000 to these amounts.

 

However, these limits assume that you were in an HSA all year. If you left the HSA during the year or started Medicare or had one of a number of change events, then the limit is reduced.

 

There are several major culprits for excess contributions (other than just actually contributing more than the limit).

 

First, if you did not complete the HSA interview - that is, go all the way until you are returned to the "Your Tax Breaks" page - the limit still might be set to zero, causes a misleading excess contribution message.

 

There are questions all the way to the end of the interview that affect the annual contribution limit.

 

Second, it is not unusual for taxpayers to accidentally duplicate their contributions by mistakenly entering what they perceive to be "their" contributions into the second line on the "Let's enter your HSA contributions" screen (see screenshot below).

 

Normally, any employee who made contributions to his/her HSA through a payroll deduction plan has the contributions included in the amount with code "W" in box 12 on the W-2. This is on the first line on this screen (above). Don't enter the code W amount anywhere on the return other than on the W-2 page.

 

Third, if you weren't in HDHP coverage all 12 months, then the annual contribution limit is reduced on a per month ratio. NOTE, this means that you have to indicate when and under what type of HDHP plan you had. Be sure to answer the questions on the screen entitled "Was [name] covered by a High Deductible Health Plan in 2019?" (see screenshot below).

 

Fourth, if you had a carryover of excess contributions from 2018, then this carryover is applied to 2019 as a personal contribution, which could cause an excess condition in 2019 as well. But note: if you had an excess contribution in 2018 but cured it by withdrawing the excess in early 2018, then do NOT report an "overfunding" on your 2018 return.

 

Fifth, the Family limit ($7,000) is for the aggregate of contributions by both taxpayers, even if both taxpayers have their own HSAs. That is, one taxpayer can’t contribute $7,000 to his/her HSA and the other contribute $3,500 to the other HSA – the $7,000  limit applies to the aggregate of all HSA contributions credited to the family (in this case, the excess contributions would be $3,500).

 

 

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garya-163
New Member

If on my 5498-SA, I had $1,250 total contribution and on my 1099-SA, I had gross distribution of $1,539.96. How was I overfunded? Thanks.

Great explanation.   Intuit should use this in their Help section.   I did leave at the end of February so I'll start over and use your info.   Thanks for helping me out with this.

BillM223
Employee Tax Expert

If on my 5498-SA, I had $1,250 total contribution and on my 1099-SA, I had gross distribution of $1,539.96. How was I overfunded? Thanks.

Remember when you are indicating your insurance coverage month-by-month, what matters is the coverage on the first day of the month.

 

Therefore, if you left HDHP coverage on March 1st, then you had two months of coverage: January and February. If you left on March 2 or later, then you can include HDHP coverage for March as well.

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