I understand that the $1000 HSA catch up payment does not get pro-rated like the $3450 does if you only have a part year HDHP. However, Turbo Tax keeps telling me I over-contributed by $250 when I enter that I contributed $3587.5 which is a prorated 9 months of the $3450 limit plus the $1000 catch up (not prorated).
TurboTax is behaving correctly. The catch-up contribution limit certainly is required to be pro-rated for the number of months that you were HSA-eligible in the same way that the regular limit is pro-rated. If you were HSA eligible for only 9 months of the year (and you were not HSA-eligible for December), your catch-up limit is $750. Section 223 of the tax code requires that the annual catch-up amount be added to the regular annual limit and then the sum divided by 12 to determine the monthly amount for pro-rating.
TurboTax is behaving correctly. The catch-up contribution limit certainly is required to be pro-rated for the number of months that you were HSA-eligible in the same way that the regular limit is pro-rated. If you were HSA eligible for only 9 months of the year (and you were not HSA-eligible for December), your catch-up limit is $750. Section 223 of the tax code requires that the annual catch-up amount be added to the regular annual limit and then the sum divided by 12 to determine the monthly amount for pro-rating.
This is the exact example given in IRS Publication 969 on page 6 under "Enrolled in Medicare" (<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/p969.pdf">https://www.irs.gov/pub/irs-pdf/p969.pdf</a>) - a man who is 65 went on Medicare in July, so while his normal HSA contribution limit would have been $4,400 ($3,400 plus $1,000), the 6 month pro-rated limit is 6/12ths his normal annual limit of $4,400. NOTE that Pub 969 has not been updated for 2018, but these examples are still valid, with the change of your annual limit to $3,450 (plus $1,000).
Thank you so much dmertz. Lively is the keeper of my HSA and they are the ones who told me that it doesn't prorate. I will pass on TurboTaxBillMc's post to them. Thank you again!!!!
What line do I add $1000 HSA catch up contributions on 8889-T?
Why does my Fed Tax due go up instead of down when I enter my $1000 HSA catch up contributions.
My company deducted 7500 from my paycheck and that shows correctly in W2, but since I am >55, I added $1000 to my HSA. When I added my contribution to line 9 the amount of taxes I I owed went up by $300 so I think I need to add it elsewhere, but I could determine where.