Married, filing jointly, we both contributed maximum of $8,750 for 2 64+ people. TTax says max contribution is $5,834, then asks for wife's contribution?

[AnnetteB6]

Please clarify what type of account you contributed to so that the question can be answered in the correct context.

[Trathalmador]

The account was a Health Savings Account at a local bank. We are both on the account, but Harold (me) is primary.  I got Medicare in September and TTax says I need to get the bank to withdraw $2,916. I was told by Medicare help line it would be ok since it was deposited in Jan, over the 6 months requirement. 

[Trathalmador]

Should I enter $ for "wifes contribution"?  I filled out all the 1099A info, then it told me to make the withdrawl from the HSA, then I was prompted to enter the wife's contribution. That made it very confusing to me. I want to fill it out correctly, but it doesn't make sense.

[Opus 17]

For an HSA, and assuming you are not covered by Medicare, your overall family limit is $7750, plus each person gets a $1000 personal catch-up contribution.   Therefore, your individual limits are $8750 but your combined maximum family limit is $9750.

If you have workplace contributions by payroll deduction, they are only entered on your W-2.  The HSA interview where it asks what your personal contributions were only refers to direct contributions made with after-tax funds.

An HSA account has one owner only, there are no joint accounts.  You need to run the interview once for one taxpayer and then run it again for the spouse.  If you exceeded the overall combined total, someone needs to remove some money before the April 15 filing deadline or you will pay a heavy penalty.

If either spouse went on Medicare, that immediately disqualifies them from making contributions, so their annual limit will be reduced.  A maximum contribution of $5834 suggests that one of you went on Medicare in September, or had some other disqualifying event.  If Spouse A went on Medicare in September and contributed the maximum $5834, then (assuming spouse B did not also go on Medicare), spouse B's maximum contribution would be $3583.  

[Trathalmador]

So I need to redo the HSA contributions, divide the max contribution by 2 and enter that amount for both of us? I had been told since the contribution was in January & medicare was September that I would not have to take $ out since it was greater than 6 months. For this year we created a new separate HSA for the wife to avoid this problem. It would have been better to create an account for each in the beginning. Good advice for others!

[BillM223 · Accepted solution]

May I assume that when you said "we both contributed maximum of $8,750", that you two contributed $8,750 in total, not each?

Since your wife did not have an HSA in 2023, her age is not relevant. If she did have an HSA in 2023, please tell me immediately.

The way this works is:

1. Assuming that you started Medicare (any part) by September 1st, then you had 8 months of HDHP coverage (Jan to Aug).

2. The annual Family HDHP annual contribution limit is $7,750 for 2023 (I assume that you had Family HDHP coverage). This limit is prorated for the number of months you had HDHP coverage with no conflicting coverage (like Medicare). So, we have $5,167.

3. The 55+ bonus of $1,000 is also prorated, so this adds $667, for a total limit of $5,834. Now you know how we got to that number.

4. There was a total of $8,750 contributed to your HSA for an excess of $2,916. I am not sure if you contributed the whole $8,750 or if you and your wife joined together and contributed the $8,750 between you.

5. TurboTax announces that there is an excess of $2,916. If indeed your wife made contributions to your HSA, you might be asked to choose who withdraws what part of the excess, but since there is just the one HSA, it really doesn't matter how you do it.

6. Contact the HSA administrator (the bank) and ask for an excess contribution (withdrawal) form. Many banks that deal with a lot of HSAs have these forms online.

7. The bank should then send you a check for $2,916. DO THIS WELL BEFORE APRIL 15th!

8. Don't gloat over the $2,916 check - you will see that this amount was added to your taxable income (if all the contributions were via box 12 with a code W on your W-2(s) on line 8f of Schedule 1 (1040)). If you made some direct contributions, came back and I'll tell you what happens.

9. The 6 months for Medicare is relevant in only one case: if you signed up for Medicare more than 6 months after your 65th birthday - in such case, Medicare is back dated 6 months from your birthday. If you signed up less than 6 months after your 65th birthday, the Medicare is back dated only to your birthday (and if Medicare started on your birthday month, then no change at all).

OK, does this all make sense?

[Opus 17]

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@Trathalmador wrote:

So I need to redo the HSA contributions, divide the max contribution by 2 and enter that amount for both of us? I had been told since the contribution was in January & medicare was September that I would not have to take $ out since it was greater than 6 months. For this year we created a new separate HSA for the wife to avoid this problem. It would have been better to create an account for each in the beginning. Good advice for others!

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For medicare, we start with your effective enrollment date.  If you enroll from 3 months before you 65th birthday to 6 months after your 65th birthday, your enrollment is effective on the first day of the month you turn 65.  If you enroll more than 6 months after your 65th birthday, your enrollment is retroactive by 6 months.  

It is the enrollment date that sets your maximum eligible contribution, but exactly when you make the contribution doesn't matter.  If your enrollment date is Sept 1, you can make up to $5834 in contributions only, but those contributions could be made any time in 2023, even after your enrollment date.  As long as you don't go over the total.

HSA accounts are owned by individuals.  So if John contributed $8750 to John's account and John is only eligible to contribute $5834, then John needs to remove $2916 from John's account or pay a penalty.

Then, we next need to determine how much Mary can contribute to Mary's account.  If Mary is age 55 or older and covered by a qualifying family plan, then Mary's limit will be $3583 or $3584, depending on how the program rounds the cents.   

It is possible, but not required, for John to withdraw more than $2916 so that Mary can contribute more than $3583.  You could make it exactly 50/50.  But there is no need to.  If Mary already contributed more than $8750, then something needs to come out.  But if she has contributed less than that amount, she can contribute more up to that amount.  

[Trathalmador]

Thanks very much for the information. I will be contacting the bank to withdraw the over amount.

[Opus 17]

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@Trathalmador wrote:

Thanks very much for the information. I will be contacting the bank to withdraw the over amount.

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If you didn't already know, you can make contributions toward the 2023 tax year up until the April 15, 2024 deadline.  So if you only opened an account for your wife, and have not funded it for 2023, she can still contribute up to $3583 for 2023.  If you are over on your account and have to withdraw $2916, and have not already made a 2023 contribution into your wife's account, you could put that $2916 (or more) right back into your wife's account and take a tax deduction.  Just make sure to tell the bank it is a 2023 contribution, not a 2024. 

[Trathalmador]

Thanks to this forum, I now know our contribution of $8,750 made in Jan 2023 needs reduced. So if I leave the full $4,375 for the wife's contribution, and withdraw $1,458.34 for my portion the 4 months I was ineligible for HSA contributions, do I report these amounts on TTax even though my 1095-A shows the full amounts? Do I have to wait for an updated 1095-A? Do I report this as income for 2023 or 2024, and how do I do this?  Thanks for the assistance...I would have no clue how to do the proper thing otherwise.

[Opus 17]

Please stop talking about "our" contributions. HSAs can never be a joint account.  If both spouse's names are listed, one might be a beneficiary, but can never be a co-owner, unless the bank has drastically messed up.  Or, maybe there are two accounts?  You need to clarify with the bank.

You Harold, are allowed to contribute a maximum of $5834 to Harold's account.  If Harold contributed $8570 to Harold's account, Harold needs to remove $2916 using the special "remove excess contributions" method at the bank.  In Turbotax Harold will report $8750 of contributions.  When the program says there is an excess, the program will ask if you will remove $2916 before April 15, and you will say yes.

Your wife, "Betty", can never contribute to Harold's account.  Betty can only contribute to Betty's account.  If Betty puts money into Harold's account, that counts as a contribution by Harold.  

You are changing details, and I have no idea where the numbers $1,458.34 and $4,375 came from.

Does Betty have an account in Betty's name?  How much was contributed?  Please clarify.