Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
serender
New Member

How do I prove to IRS that I've paid for HSA overage?

I got two notices from IRS -- CP14 I (HSA overpayment) and CP501H (no health insurance coverage penalty.) However, I included these data points in my TT return and I was under the impression that these fees were included in my final amount due at the end of the TT process. I can see their line item entry in my filing, but how do I validate that these elements were included in the final TT calculation?
1 Best answer

Accepted Solutions
dmertz
Level 15

How do I prove to IRS that I've paid for HSA overage?

Examine Form 1040 line 59 to see that a penalty of 6% of the excess contribution amount is shown.  Examine Form 1040 line 61 to see that the Shared Responsibility Payment is shown.  Total the amounts on Form 1040 lines 56 through 62 to verify that TurboTax has correctly summed these to provide the result shown on Form 1040 line 63.

To further investigate the amount shown on your Form 1040 line 59, examine Form 5329 Part VII to see the calculation of 6% of the excess HSA contribution.

Since it appears that you used the online version of TurboTax, I suspect that you'll be unable to view TurboTax's worksheets where TurboTax calculates the amount shown on your Form 1040 line 61.  These worksheets are at the end of TurboTax's 8965 form which appears to be excluded from any of the downloadable pdf copies of an online TurboTax-prepared tax return.  You'll need to view the instructions for Form 8965 and perform the calculation of the Shared Responsibility Payment yourself, then compare it to the amount shown on Form 1040 line 61  (Use the appropriate year's instructions):

https://www.irs.gov/pub/irs-prior/i8965--2015.pdf

https://www.irs.gov/pub/irs-prior/i8965--2016.pdf

With regard to your excess HSA contribution, apparently you did not correct the excess by the due date of the tax return for the year for which the excess contribution was made.  To eliminate the excess and the associated penalty each year going forward, you either have to be able to apply the excess as an eligible HSA contribution for a subsequent year or you'll need to take a taxable distribution of the excess.  If you take a taxable distribution of the excess, you'll also be subject to a 20% early-distribution penalty if you are under age 65 when you make the distribution.

View solution in original post

1 Reply
dmertz
Level 15

How do I prove to IRS that I've paid for HSA overage?

Examine Form 1040 line 59 to see that a penalty of 6% of the excess contribution amount is shown.  Examine Form 1040 line 61 to see that the Shared Responsibility Payment is shown.  Total the amounts on Form 1040 lines 56 through 62 to verify that TurboTax has correctly summed these to provide the result shown on Form 1040 line 63.

To further investigate the amount shown on your Form 1040 line 59, examine Form 5329 Part VII to see the calculation of 6% of the excess HSA contribution.

Since it appears that you used the online version of TurboTax, I suspect that you'll be unable to view TurboTax's worksheets where TurboTax calculates the amount shown on your Form 1040 line 61.  These worksheets are at the end of TurboTax's 8965 form which appears to be excluded from any of the downloadable pdf copies of an online TurboTax-prepared tax return.  You'll need to view the instructions for Form 8965 and perform the calculation of the Shared Responsibility Payment yourself, then compare it to the amount shown on Form 1040 line 61  (Use the appropriate year's instructions):

https://www.irs.gov/pub/irs-prior/i8965--2015.pdf

https://www.irs.gov/pub/irs-prior/i8965--2016.pdf

With regard to your excess HSA contribution, apparently you did not correct the excess by the due date of the tax return for the year for which the excess contribution was made.  To eliminate the excess and the associated penalty each year going forward, you either have to be able to apply the excess as an eligible HSA contribution for a subsequent year or you'll need to take a taxable distribution of the excess.  If you take a taxable distribution of the excess, you'll also be subject to a 20% early-distribution penalty if you are under age 65 when you make the distribution.

Dynamic AdsDynamic Ads
Privacy Settings
v