HSA excess contribution problem

simpleshue — Tue, 18 Feb 2020 14:22:53 GMT

Hi,

Both me and my wifecontributed to our own HSA. $1500 for me and $5500 for my wife. So the total does not excess the limit $7000. However, TurboTax shows there is a excess contribution of $2000 for my wife.

Is there anyway to fix it?

Re: HSA excess contribution problem

VictoriaD75 — Thu, 20 Feb 2020 02:01:44 GMT

In 2019, the contribution limits are $3,500 and $7,000 for self-only and family coverage respectively.

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You may withdraw some or all of the excess contributions and avoid paying the excise tax on the amount withdrawn if you meet the following conditions.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You withdraw any income earned on the withdrawn contributions and include the earnings in "Other income" on your tax return for the year you withdraw the contributions and earnings.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 excess contribution problem

dmertz — Thu, 20 Feb 2020 04:23:54 GMT

An excess contribution of $2,000 is a correct result if you each have separate self-only HDHP insurance since each of you would be subject to a separate $3,500 contribution limit. You only get to split the $7,000 family limit if both of you were HSA eligible individuals and at least one of you was covered by a family HDHP plan (in which case you must indicate that both of you are covered by a family HDHP plan).

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HSA excess contribution problem

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Re: HSA excess contribution problem