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Level 1
posted Sep 26, 2024 2:41:55 PM

Excess HSA Contributions in 2023 due to also having an FSA the whole year

We have a question about withdrawing excess HSA contributions due to accidentally signing up for both an HSA AND a general purpose FSA in 2023.

 

Details:

  • My husband signed up for a HSA and Family Plan HDHP (for him and our son) in 2023, while I signed up for a general purpose FSA and a non-HDHP for the same year. D'oh!
  • However, we didn't realize we'd messed this up until early 2024. Consequently, we withdrew ALL of my husband's employer-made HSA contributions for 2023 ($7,750) before 4/15/24.
  • We also filed an extension for our 2023 taxes, just to give us more time to wrap our heads around how to correctly enter this info in Turbotax. We made sure to pay extra for the amount of tax we estimated owing for 2023, in order to account for that $7,750 of excess HSA contributions that weren't included as taxable income on my husband's W-2 for 2023.
  • For the HSA interview portion of Turbotax, we indicated that my husband did NOT have valid HDHP coverage for the entire year, since we were both covered by my FSA. We saw in an earlier post that Turbotax will automatically add the excess contributions back to our taxable income if you do this - is that correct and if so, where should we be able to confirm that it did this?
  • Under our HSA summary, the following is listed for my husband (the HSA-owner) in Turbotax:
    Deduction: $0
    Total distributions: $0
    Taxable distributions: $0
    Taxable earnings on excess contributions: $0
    Taxable employer contributions: $0 
    Tax-free employer contributions: $0
    Excess employer contributions withdrawn: $7,750

However, Turbotax will not let us file due to this error:
Form 8889-T: HDHP coverage check box needs to be checked to indicate the type of coverage held under a high-deductible plan during 2023.


Is this because my husband's W-2 still shows the $7,750 of employer contributions for 2023? Or is this a bug and we should we try clearing our forms and starting over? 


Could you please advise on what we're doing wrong and how we're supposed to handle this in Turbotax? We have tried reviewing other posts about this and keep going around in circles. Thank you so much for your time!

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1 Best answer
Level 15
Sep 26, 2024 9:41:24 PM

For type of HDHP, check family even though not qualified.

For each month you must indicate none for HDHP (there is no box for not qualifies).

The excess should appear on schedule 1 line 8f.

Did you earn any income on the contributions? If so, that also needs to be withdrawn.

 

3 Replies
Level 15
Sep 26, 2024 6:13:20 PM

Level 15
Sep 26, 2024 9:41:24 PM

For type of HDHP, check family even though not qualified.

For each month you must indicate none for HDHP (there is no box for not qualifies).

The excess should appear on schedule 1 line 8f.

Did you earn any income on the contributions? If so, that also needs to be withdrawn.

 

Level 1
Sep 30, 2024 10:37:15 AM

Thank you so much for your response @Mike9241 - we did this and everything looks like it's showing up correctly. Such a relief - really appreciate your time!

 

And oops, I forgot to mention that in my original post - yes, we also withdrew the income on the excess contributions prior to 4/15/24. Further, it's our understanding that since we withdrew that income on the excess contributions in 2024, we will pay taxes on that earned income on our 2024 return. Thanks again and have a great week!