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JoeHe
Level 2

HSA contribution limit calculation

I have an HSA, to which I was contributing for my wife and me. No employer contributions. We're both over 55. On August 1 I was eligible for Medicare, so our family limit is $4,750 (7/12 of $8,100 ($7,100 plus $1,000 of catchup)). Turbotax calculates that correctly. My wife is not on Medicare, so we started a separate HSA for her, in her name. Her contribution limit should be $2,654.17 (5/12 of ($3,550 + $1,000)), but it's calculated as $6,621. The questionnaire page asks if she was covered by an HDHP plan for the year, and the correct answer is different plan types (Family for the first 7 months and individual for the last five months). Changing the selected boxes for the type of plan doesn't affect the calculation. What needs to be entered differently to get the calculation corrected? Also, at the end of the HSA process, with the correct and not the TurboTax numbers, TurboTax calculates an Excess Contribution of $175. I have no idea where that calculation comes from. 

1 Best answer

Accepted Solutions
dmertz
Level 15
Intuit Approved!

HSA contribution limit calculation

First, your own contributions are limited to 7/12 of $8,100 = $4,725, not $4,750.

 

The amount that TurboTax displays as the maximum contribution for each spouse is calculated without regard to the other spouse's contributions and represents the individual limit, not the combined limit.  After factoring in the combined contribution limit TurboTax determines your wife's contribution limit to be the correct amount 5/12 of $3,550 (=$1,479.17) plus $1,000 = $2,479.17, not 2,654.17.  The $175 error is somewhere in your own calculation of your wife's contribution limit.  (I'm guessing that you calculated 5/12 of $3,970 instead of 5/12 of $3,550, then added the $1,000.)

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7 Replies
dmertz
Level 15
Intuit Approved!

HSA contribution limit calculation

First, your own contributions are limited to 7/12 of $8,100 = $4,725, not $4,750.

 

The amount that TurboTax displays as the maximum contribution for each spouse is calculated without regard to the other spouse's contributions and represents the individual limit, not the combined limit.  After factoring in the combined contribution limit TurboTax determines your wife's contribution limit to be the correct amount 5/12 of $3,550 (=$1,479.17) plus $1,000 = $2,479.17, not 2,654.17.  The $175 error is somewhere in your own calculation of your wife's contribution limit.  (I'm guessing that you calculated 5/12 of $3,970 instead of 5/12 of $3,550, then added the $1,000.)

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JoeHe
Level 2

HSA contribution limit calculation

The short answer is, Thank you, that explains it!

 

The longer answer is some mistyping on my part. My HSA limit is $4,725--I just mistyped. I appreciate your trying to recreate my error with my wife's contribution limit. I think it should be 5/12 of ($3,550 +$1,000), or $1,896. (If you're interested, my error was copy and paste and calculating 7/12 of that $4,550. I believe that the $1,000 catch up has to be prorated through the year (although there is no net impact on us, as a couple). To your knowledge, is that correct?

 

I was wondering where the maximum contribution calculation on the page where I lay out that my wife was on a Family HDHP for 7 months and Self Only for 5 months came from. When I look at the correct numbers, that figure of $6,621 is the sum of my and her contribution limits. Some feedback for the Turbotax world is that locating that calculation on that page is confusing.

 

Thank you for your help

Joe

dmertz
Level 15

HSA contribution limit calculation

The catch-up is per individual who is age 55 or over, made to that individual's HSA.  Since both you and your wife are over age 55, each of you is eligible for a catch-up contribution to each one's own HSA:  5/12 of $1,000 to your HSA for your 5 months of HSA eligibility and an entire $1,000 of catch-up to your wife's HSA for her full-year eligibility.

 

$6,621 = 7/12 of $7,100 + 5/12 of $3,550 + $1,000 (rounded to the nearest dollar).  That would be your wife's maximum contribution if you didn't allocate any of the family limit to your contribution and you contributed to your HSA only your catch-up of 5/12 of $1,000.  $4,725 + $2,479 = $583 + $6,621

davedski
Level 1

HSA contribution limit calculation

I think I am beginning to understand the calculations, but would you mind running through my scenario. It's basically the same thing but May 2020 is my Medicare start date.

My wife is also over 60, we were on the family HDP plan through April, then she went on individual HDP for the remainder of 2020.

 

I calculated 

Myself to be 4/12 * $4550 = about $1516.  (using 1/2 of $7100, plus $1000 for each of us)

My wife to be 12/12 * $4550 = $4550

 

But TurboTax is calculating maximum HSA contributions as:

Myself $2700 ( I'm assuming 4/12* $9100)

My wife at $5733 ( I this 8/12* $7100 +$1000?)

 

Can we make total contributions up to the TurboTax calculations amounts into our respective HSA accounts??

dmertz
Level 15

HSA contribution limit calculation

As I mentioned in my original reply, the amount that TurboTax displays as the maximum contribution for each spouse is calculated without regard to the other spouse's contributions and represents the individual limit, not the combined limit.  That means that TurboTax is calculating these as 4/12 * $8,100 = $2,700 for you and 4/12 * $8,100 + 8/12 * $4,550 = $5,733 by allocating the full $7,100 family limit to each of you separately.  However, once you divide the family limit as you chose to do, the result is as you calculated and is the maximum combined contribution.  Changing the allocation would change the amount each is eligible to contribute, but the combined limit will be the same, $6,066.  In other words, the combined limit is $6,606 but, regardless of how you split the family limit, you are not permitted to contribute more than $2,700 and your wife is not permitted to contribute more than $5,733.

Milburn Stone
New Member

HSA contribution limit calculation

I'd like to add a wrinkle to these questions about HSA contribution limits. My wife and I are both over 65, and we were covered under a family HDHP through April 30, 2020 by my former employer through COBRA.  I wasn't paying very close attention to that April 30 date, because I enrolled in Medicare on April 1 in connection with my 65th birthday on April 3.  My enrollment in Medicare made me ineligible to make HSA contributions after April 1.  Prior to that date I was the only one with an HSA and I made contributions to it on behalf of both of us.  My wife obtained her own HDHP as of May 1 and opened her own HSA.  The wrinkle in all of this is that even though I was covered by Medicare as of April 1, both my wife and I were still covered under my employer's HDHP until April 30.  My question is whether or not my wife's contribution to her HSA for April can be based on us both being in a family plan during April, or based only on her being a part of that plan during April.  The difference in our total contribution for the year is only $295.83 ($3,550/12) but I'd like to get it right.  Thanks very much.

dmertz
Level 15

HSA contribution limit calculation

[Edit:  Corrected to assume that you both are over age 55, not under.]

Since your wife was covered by a family plan on April 1, she can make a contribution for April based on the contribution limit for having family coverage.  Assuming that you made regular contributions to your HSA of $1,775 (plus $333.33 catch-up), her regular contribution for April is $591.67 and for each of the months after that is $295.83 .  Assuming that she remains eligible for the remainder of the year, her total contribution would be $2,958.33 (plus $1,000 of catch-up if she too was age 55 or over in 2020).

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