Turbotax showing excess HSA contributions on carryover worksheet from 2017

[mister_bill]

I'm working on my taxes on Turbotax Premier (CD version). I noticed line 11a of the Carryover Wks claims I have $4,819 in excess HSA contributions carried over from 2017 that it's making me pay tax on (schedule 4 line 59). However, I did not have any excess contributions and the $4,819 amount is what was shown on my 2017 W-2 as employer contribution. and was not disallowed. And Turbotax 2017 does not show anything on that corresponding line (which presumably it would if there were in fact an excess contribution). BTW I did not have an HSA in 2018.

Obviously I can zero out the amount on the carryover worksheet but would like to understand why this is happening and perhaps get it fixed.

[BMcCalpin]

Since I cannot see your tax return, I can only make suggestions on what is happening and how you can address the situation.

As you correctly deduce, you should have a carryover only if two things happened in 2017:

• you made excess contributions to the HSA in 2017, and
• you did not withdraw the excess before the due date of the return.

You say that you did not have excess contributions in 2017 and that the $4,819 was the code W amount in box 12 on your W-2.

Please look at your 2017 return at form 5329, Part VII, line 48. Is there a number here? This would be the penalty in 2017 for excess HSA contributions that were not withdrawn before the due date of the return.

If you did not have an amount on line 48 on the 5329, is it possible that in one of your iterations of doing the 2017 return, that you did see the excess contribution message but subsequently fixed it? Perhaps the carryover lagged behind.

On your 2017 form 8889, on lines 12A, 12B, and 12C (this is as seen in TurboTax Forms mode), are there any numbers here? 12A is the excess HSA contributions made through the employer, 12B is the amount of the excess withdrawn before the due date of the return, and 12C is the amount of the excess carried over to 2018. If there was no excess in 2017, then all three numbers should be blank.

On your 2017 form 5329 (if one), is there a number in line 46? This would be a carryover from 2016 to 2017, which could have triggered an excess in 2017 if you had not reduced your 2017 contribution level. Yes, I am grasping at straws here.

You have obviously investigated this, and if the fields on 12A, 12B, and 12C are blank, then I can have no explanation for why you see an amount in line 11a in the 2018 Carryover Wks.

[mister_bill]

Thanks for the response. I had not gone thru the process of completing the return when I posted and subsequently did last night. Even though I had overode in the excess contribution field and made it $0 it still asked me about it. It seemed to be concerned about whether I had coverage for all 12 months of 2017 and would be covered by the "last month rule". Turbotax asked which months I had an HSA in 2017 and after saying that I had one for all of the year, it told me that I did not have any carryover. I just went back and un-overrode the carryover field and it still seems to be taxing me. I don't have time at the moment to go back thru the process with that field filled in to see if anything changes.

I did not have a form 5329 last year because I did not have any excess contributions. I contributed the maximum amount allowed (including $1k extra for myself and my spouse for being 55+).

[mister_bill]

Form 8889 has no numbers in 12a-c.

[BMcCalpin]

When you saw the question in the 2018 HSA interview that asked you if you "overfunded" your 2017 HSA, did you answer "no"? What this question is really asking is "Did you carry over any excess from 2017?" It will ask everyone this question, so it's not just you ;-).

As for the December 1, 2017 question, it also asks everyone about that, since some people could be like you and have HDHP coverage in 2017 and not in 2018. Yes, if you were covered by your HDHP every month in 2017, then you didn't need to use the last-month rule (which allows you the full annual contribution limit even if you weren't under HDHP coverage all year, so long as you were under HDHP coverage on December 1, 2017). So it sounds like you are fixed up.