topic Re: HSA in Get your taxes done using TurboTax

HSA

kericson — Wed, 19 Feb 2020 02:35:02 GMT

My wife used HSA funds from a previous year to pay a medical bill ($22) in 2019. She received a 1099-SA. I entered it in TurboTax and then answered the questions that she is not part of a high deductible plan in 2019 - she carried regular insurance. I, on the other hand, opened an HSA and put in $8,000. TurboTax is telling me that I can't do that and that I must withdraw it. This doesn't seem right. what is up?

Re: HSA

VictoriaD75 — Thu, 20 Feb 2020 02:29:00 GMT

Your wife can no longer contribute to an HSA plan, but she can continue to use funds from prior contributions for qualified medical expenses.

You are an eligible individual even if your spouse has non-HDHP family coverage, provided your spouse's coverage doesn't cover you. Your contribution limit depends on the type of coverage you have. In 2019, the contribution limits are $3,500 and $7,000 for self-only and family plans respectively. Catch-up contributions of $1,000 are allowed for taxpayers age 55 or older. There is no such thing as a "joint" HSA.

The most common error I see when entering HSA contributions are double reporting. Typically, these payroll contributions are reported on your W-2 in box 12 with code W. If that is the case, no other contribution needs to be reported in the software.

Under the Deductions & Credits menu, confirm the following:

Expand the menu for Medical
Click Start/Revisit next to HSA, MSA Contributions
Confirm the account ownership and click Continue
Continue in through the screens until you reach Let's enter your HSA contributions
Stop here. If all of your contributions were through payroll deductions and reported on your W2, do not enter anything on this screen. If that is the case, either leave the box empty or type $0 in the box next to Any contributions you personally made

If it turns out you did have an excess contribution, the following applies. Generally, you must pay a 6% excise tax on excess contributions. See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. The excise tax applies to each tax year the excess contribution remains in the account.

You may withdraw some or all of the excess contributions and avoid paying the excise tax on the amount withdrawn if you meet the following conditions.

You withdraw the excess contributions by the due date, including extensions, of your tax return for the year the contributions were made.
You withdraw any income earned on the withdrawn contributions and include the earnings in "Other income" on your tax return for the year you withdraw the contributions and earnings.

Pub 969 Tax-Favored Health Plans

Re: HSA

L H A — Tue, 17 Mar 2020 21:19:54 GMT

I have a different problem. I withdrew funds in 2019 for medical expense from the balance remaining in my account from a previous employer. I currently have a family plan which is not a high deductible plan and of course there were no contributions to a HSA plan in 2019. TurboTax wants me to check that one of us had a high deductible plan for at least one month during 2019-which we didn't. I over rode these checkboxes and am now getting an error. How do I deal with this?

Re: HSA

BillM223 — Wed, 18 Mar 2020 13:59:27 GMT

@L H A

You or your spouse has an HSA (I can't tell which), so check the box for that person.

Then, when you go through the HSA interview, indicate that at no time that you had HDHP coverage. Since you made no contributions, this will be fine.

In the Review, you may get flagged for having a form 8889 (you should in order to report the distributions), but for not having Self-only or Family coverage at any point in the year.

Go ahead and check Self-only. It won't matter because you already said that you had no coverage at any point in the year.

Yes, this is contradictory, but your 8889 will be numerically correct and you will be able to e-file.