Excess contribution to HSA

[bicknell]

I have an HSA in 2019, but TurboTax says it is all taxable because I WAS claimed as a dependent on my parent’s return. However I WASN’T claimed. I could have been claimed by them. I answered the applicable questions correctly in Gen Info. Other tax software (Taxslayer and IRS Free File) got it correct. How can I get TurboTax to do it right?

[DianeC958]

The question about whether you can be claimed on another person's tax return is part of the Personal Info in TurboTax.

Please review that section to answer that  you cannot be claimed on another person's tax return and you were not claimed on another person's tax return.

[AlanMcR]

Looks like I blew it in 2018 taxes and entered my company's contribution into the "you personally made" box.  This resulted in a tax.

Q1: how do I fix that?

Also this seems to be carried over into 2019 taxes, and is trying to charge me again for an excess contribution. 

Q2: How do I fix that?

Never tried filing a corrected TurboTax return.

[ThomasM125]

You have to amend the return for 2018 to correct the error. You can follow these instructions to do that:

1. Log into your TurboTax program

2. Find "Your Tax Return & Documents" on your home page

3. Click on the "Show" option

4. Select the year you want to amend

5. You will see an option to "Amend(change)" the return for that year.

6. Just follow the instructions to start the amend process.

What you do is go back to the entry that you made incorrectly and then change it. You will be asked to type an explanation of why you are amending the return. Once you are done, you must print the return out, sign it and mail, along with a check for any tax due.

For 2019, just indicate that you didn't make an excess contribution for the previous year, since you corrected that with the amended return.

[ius77]

In 2018 I received an ESOP of $10,237 that I rolled over into an IRA.     I turned 71 in Dec. 2019.     It seems like only $6,500 was accepted, and $3,737 is considered excess.   I paid a tax on that $3,737 last year.  Also,  in 2019, I withdrew $1,113 from my IRA.     

I"m doing my tax on Turbo Tax Premium and am being hung up on this.    What entry will I make in the Retirement section for 2019?     I think the excess is $2,624 ($3737-$1113= $2624)   I tried to enter that next to the $10,237 2018 entry, but it didn't work.    I really need help.

4/13/20    Thanks, everyone.    I found the problem and corrected it.    IRS accepted the return.    I had made a mistake on the 2018 tax.   I had to amend and now waiting for refund.

[lisayamagatalynch]

So I made an Excess contribution because I did not understand that my entire family had to meet the family maximum contribution of $7000. My husband as a single high deductible insurance holder under the age of 55 made a contribution of $3500 to his HSA account in 2019, and I made a contribution of $7000 as a family high deductible insurance holder under the age of 55 into my HSA account in 2019. I understand the mistake now, I wish I understood it before, but I am working with the HSA service provider and have submitted the Excess Contribution form to withdraw $3500 plus interest before 4/15 from my account. They told me that should be process by the end of the week, and it will take a little longer for them to issue a 1099SA, but they will issue a corrected document.

I have not filed taxes yet assuming I need the 1099SA before I do, or at least it seems safer, but my question is during 2019 I had withdrawn more than $3500 from HSA; therefore, I will get the Excess contribution amount of $3500 plus interest back as other income, the new 1099SA will state that my 2019 contribution was $3500, but is it going to be a problem if the withdrawn amount for 2019 is something like $4200? Or based on the fact that the excess $3500 is being withdrawn before 4/15, is it going to be like the extra $1200 came out of there so in the end it does not matter?

I hope my question makes sense. I asked my HSA service company, but they told me that they cannot answer any tax related questions.

[BillM223]

@lisayamagatalynch

When you withdraw excess contributions, you get a 1099-SA with a distribution code of '2', and the earnings in box 2. Please don't try to calculate the earnings yourself - you can't (only the HSA custodian can do it).

When you get this 1099-SA,(it may be next year), then enter it into TurboTax, and the earnings will be added to Other Income.

If TurboTax reported to you this year that you had excess contributions, then this amount has been automatically added to Other Income on Schedule 1. You don't need a 1099-SA to report this.

Did you really withdraw $4,200 as the excess contribution? If so, that was wrong. If your excess that TurboTax told you about was $3,500, then that's all you should have asked the HSA custodian to withdraw. As I said above, don't guess at what the earnings are and withdraw. An HSA is not a savings account where you can willy-nilly withdraw money.

If you did withdraw $4,200 but your excess was only $3,500, then you have two choices:

1. find $700 in medical bills that were incurred after the start of the HSA that you paid with after tax dollars and document that the $700 withdrawn was for these bills.

2. Tell TurboTax that you had a $700 distribution that was not for qualified medical expenses. This will be taxed and hit with a 20% penalty.

I am not sure at this point that I fully understand your situation, so tell me if I got it right, and we can talk about the $700.

[lisayamagatalynch]

Sorry I was not clear, my gross distribution for 2019 was $4200. I contributed a total of $7000, so my excess contribution was $3500. I was worried because in the end I was supposed to contribute $3500, but my distribution was $4200. I have sent in a request for withdrawing the $3500 excess contribution and I am aware that the HSA agency will figure out the interest earned.

[AlanMcR]

The contribution limit has nothing to do with the distributions that you did (or did not) take.  You may leave funds in the account year to year without penalty. 

You and your employer are only allowed to contribute a set amount to the HSA each year ($3500, by your calculation).  Anything over that limit will be declared as income and have an additional 6% excise tax added to that, each year, until corrected. 

Your employer can ask for their contributions back, or if you made the contributions, then you can ask for them back.  I believe the cutoff is the end of the tax year.

[JohnW222]

@lisayamagatalynch

AlanMcR, above, is correct.  Distributions and contributions are totally different issues; one has nothing to do with the other.

When you get your Form 1099-SA reflecting your excess contributions, enter it into TurboTax, as is.  Do not change any of the data when inputting.

[Kslafreniere]

My employer withheld contributed $200 to my $7000 HSA contribution for 2019. TT is now saying I have excess contributions of $400. How do I fix to $200?

[lisayamagatalynch]

Ok so then, I know that in TurboTax will tell me that I made excess contribution based on the information I had from my 2019 1099-SA, which I am grateful of because that is how I figured out my mistake. I have typed in TurboTax how much of the excess contribution I will withdraw through the HSA agency before 4/15/20. The HSA agency told me that they received my Excess Contribution Form, and they will correct my mistake soon, but the corrected 1099-SA may take a bit before I can get a copy. Should I wait for the corrected 1099-SA before I file my taxes, and if necessary file for an extension?

[DMarkM1]

In the "Deductions & Credits" tab scroll down to "Medical" and find "HSA" in the drop down menu.  Edit/update that topic. 

When you progress through the interview you will get to page showing the contributions.  If there were contributions entered from box 12 of your W2 those will show up in the top box. 

If you contributed (personally added money/wrote a check) then you would put that amount in the second box.  The total of these boxes cannot exceed your maximum (self or family as applicable).  The total must match your form 5498-SA which will show all contributions.  If you have over contributed you need to remove the excess to avoid penalties.  

[DGrigg]

I was surprised that I found the maximum HSA contribution in 2019, was prorated for the year.

Background:  I reached age of 65 in late February.  I was enrolled in a High Deductable medical plan from 1/1/19 - 3/31/19 to cover my wife whom turned 65 in early April.  I went on Medicare effective 3/1/19, and my wife went on Medicare effective 4/1/19.   I made $4,000 contribution to my HSA account, prior to my 65th birthday.   My employer reported correctly that my contribution to HSA was $4,000.  Turbo Tax software advised me that I had an excess contribution of $2,000.   Apparently the max contribution was prorated to be $2,000, so I contributed too much.  So I replied to the software that I would withdraw the extra $2,000 by April 15th.

Two Questions:

1. Is the $2,000 limit for my circumstances detailed above accurate?

2. With the government filing deadline moved back three months, does that mean I can wait till the new deadline versus by 4/15/20, to withdraw the excess $2,000? 

Thanks in advance for answers.  

[ius77]

Thanks for your reply.   I had to Amend a mistake made on the 2018 Federal tax.   That eliminated the mistake in 2019.  The 2018 contribution was a rollover, not a regular contribution.   That is why it showed up as an excess.   

Thanks for your help.