Form 8889-T: Line 12 Wks, line B should not be greater than the amount of excess employer contributions / excess HSA funding distributions

[alokb]

I am getting the error message above during the Smart Check.

I overcontributed to my HSA. I requested a refund of the excess. The HSA company sent more than I asked for, for unclear reasons.

But when I enter the actual refund sent, I'm getting the error above.

I don't have time to get them to cancel one check and issue a new one, and a couple hundred less in my HSA is not a big deal. I believe I have to work with what I have. (The upshot is I contributed less than the max this year because of this situation.)

How do I get Turbotax to let this through?

For more context: In the Forms view of 8889-T, there's a worksheet for Line 12. Line A shows the Gross Excess Contribution (the amount over the max). Line B shows how much the HSA company returned. Line B is greater than Line A. Line A is coming from the W-2 minus the max contribution for 2024 - can I manually change it somehow? If I set Line B to be equal to Line A, then it'll look like I contributed the max for the year, which is no longer the case. Thanks for your help.

[BillM223 · Accepted solution]

TurboTax should have reported the excess. This is often different from what taxpayers think is the excess, because it is not easy to calculate it (things got into it that taxpayers don't think about).

Did you ask for the withdrawal of excess contributions from your HSA? In that case, what you were sent was probably the excess you asked for plus the earnings for the excess while it was in the HSA. The excess should be in box 1 of the 1099-SA (if you have gotten it yet), and the earnings will be in box 2. Box 3 should have a distribution code of 2, which tells TurboTax to add the earnings to your Other Income, and ignore the excess. 

The 1099-SA will be added to your 2023 return done in early 2024.

As for Line 12, this is an all-too-common situation where a number has gotten "stuck". In this case, you entered the amount of excess to withdraw after the end of the year on one pass, then wanted to change it on another pass, but the screens in TurboTax don't change that amount.

To fix it, you need to do an HSA "Reset", wherein you delete all HSA data. To do so, please do the following:

***Reset***

1. make a copy of your W-2(s) (if you don't have the paper copies)

2. delete your W-2(s) (use the garbage can icon next to the W-2(s) on the Income screen)

*** Desktop***

3. go to View (at the top), choose Forms, and select the desired form(s) 1099-SA (if one), 8889-T, and 8889-S (if one). Note the Delete Form button at the bottom of the screen.

*** Online ***

3. go to Tax Tools (on the left), and navigate to Tools->Delete a form

4. delete form(s) 1099-SA (if one), 8889-T, and 8889-S (if one)

5. go back and re-add your W-2(s), preferably adding them manually

6. go back and redo the entire HSA interview....

[alokb]

Thanks BillM.

Unfortunately, I don't have a 1099-SA yet - I believe that will arrive after April 15. However, the company did agree to correct the amount they sent me. So I'll likely have to file an amendment later, especially if there are any earnings shown on the 1099-SA.

For now, I did get the "stuck" answer unstuck. I did it by getting the error again in the Smart Check, then going to the Forms view, and manually changing the number in the 8889-T worksheet in question to the corrected amount the company is now issuing.