HSA contributions - split over multiple accounts

[mwaltz1]

I contributed $7,200 total to HSA's.

$5,400 to my HSA tied to a family HDHP through August.

$1,250 to my HSA for single coverage Sept - Dec.

$550 to spouse's HSA for single coverage Sept - Dec.

Turbotax is telling me I contributed $650 too much into my HSA, but shows both accounts could contribute $6,000.

(This is incorrect accounting to this post that says I can contribute any amount to either account, as long as I don't go over the maximum - https://ttlc.intuit.com/community/health-care/help/why-am-i-showing-an-excess-hsa-contribution/00/26...)

Turbotax allows me to withdraw the surplus $650.

If I select this option, all is fine according to Turbotax, but I then didn't contribute my $7,200 maximum.

If I chose to withdraw the $650 and increase the contribution on my spouse's account, which in theory should correct what turbotax is seeing as an over contribution, it then says I contributed $1,300 too much.

Does anyone have any ideas how to correct this?

[Mike9241]

for Sept to Dec did you have self-only coverage for yourself while your spouse had self only coverage for herself or did you actually have family coverage for that period

if self-only for the last 4 months. your maximum contribution for 2021

is $7200 annual amount prorated for 8 months or $4800

+ $3600 annual amount prorated for 4 months or $1200

total for you $6000 max

you contributed to your a/c $6650

spouses maximum contribution

3600 annual amount prorated for 4 months or $1200

she got $550

if you withdraw the $650 from your account + earnings thereon by 4/15/2022 (earnings are taxable) - you would get form 1099-SA showing the withdrawal (maybe not until 2023) contact the HSA trustee for procedure to follow.  there should be no penalty (possible Turbotax bug) for 2021

and you can put $650 into spouse's HSA.  

here's from the form 8889 -HSA instructions

Excess Contributions You Make
To figure your excess contributions
(including those made on your behalf),
subtract your deductible contributions

(line 13) from your actual contributions
(line 2). However, you can withdraw
some or all of your excess contributions
for 2021 and they will be treated as if
they had not been contributed if:
• You make the withdrawal by the due
date, including extensions, of your 2021
tax return (but see the Note under
Excess Employer Contributions, later);
• You do not claim a deduction for the
amount of the withdrawn contributions;
and
• You also withdraw any income
earned on the withdrawn contributions
and include the earnings in “Other
income” on your tax return for the year
you withdraw the contributions and
earnings.

now if you really had family coverage all year that's the box that should be checked for each month on both forms. then there will be no issues. you can contribute the $6550 to your a/c and the $550 to hers and get a $7200 HSA deductions

[mwaltz1]

I agree with your calculations. I didn’t know in the beginning of the year that I would be changing jobs/insurance/HSA and this really should just track if I over contributed in total. 

Only $550 out of $1,200 was contributed toward the spousal account. 

I should be able to withdraw the $650 over contributed in my account and make a $650 extra contribution in the spousal account before I file my taxes and everything should be solved. 

But TurboTax does not allow this. 
If I increase the contribution on the spousal HSA by $650 and show that I will be withdrawing $650, TurboTax then shows that we are $1,300 over contributed. 

How do I report this issue to TurboTax because I can’t move forward as is. 

[BillM223]

To possibly repeat what Mike wrote:

Family Jan – Aug – 4,800

Self-only Sept – Dec – 1,200

Subtotal – 6,000 - his annual HSA contribution limit.

He contributed 5,400 + 1,250 = 6,650 for 650 excess

Her annual HSA contribution limit is 3,600 times 4 divided by 12, or 1,200. Since you have apparently contributed only 550 to her HSA, this means that you should be able to contribute another 650, as you have said.

How are you entering in the HSA interview that she is making an additional $650 contribution to her HSA? Are you entering it as a personal (direct) contribution? And where is TurboTax telling you that the excess is now 1,300?

Please reconfirm (by going through the HSA interview) the contributions you gave us above. Also, if you can give us a screenshot of your HSA Summary screen (with any personal information redacted). 

At the end of your reply, please add "@" and "BillM223" without the space in between, so I will be notified when you respond.

[mwaltz1]

The first set of scenarios is exactly as it currently is.  $6,650 contributed to my HSA, $550 contributed to spousal HSA.

Screenshot 1, my HSA:

Screenshot 2, covered by HDHP every month.  Family through August, separate plans Sept - Dec. (Both of the accounts show the maximum contribution limit as $6,000 after you click on the "show max contribution", which is a bit deceiving since you can't contribute $6,000 to each.)

Screenshot 3, $550 total contributed to spousal HSA:

Screenshot 4, shows $650 excess contributed to 1st HSA:

Screenshot 5 - went back in and changed spousal HSA to $850 additional contribution instead of $200 ($1,200 total contribution), basically moving the $650 excess from account 1 to account 2.

Screenshot 6 - clarify who has the excess $650 contribution:

Screenshot 7, now shows a $1,300 surplus:

How do I show the excess was taken out of one account and moved to the other?  

I could "show" a lower contribution on account #1 if I had contributed on my own, but they were payroll deducted/employer contributions, so the amounts are coming from the W2.

[BillM223]

@mwaltz1 Thanks for the screen shots.

I wonder two things: (1) whether or not answering "both of us" on screenshot 6 would change the program's reaction for #7 (even though, yes, it was your excess), and (2) if the current interview can't handle your unusual situation.

Could you change the answer in #6 and see what it does?

Alternatively, you could take out the extra 650 for your spouse, go through the interview, get the 650 excess warning, indicate that you are going to withdraw it, then finish the HSA interview before entering it again to add the 650 for the spouse? I ask this because TurboTax tends to hang on some numbers across sessions, and I wonder if having a previous withdrawal will allow it to handle your spouse's HSA separately. 

[mwaltz1]

Unfortunately selecting the "both of us" option doesn't actually do anything.

It then requires me to select who the excess should be allocated to, which no matter how I allocate the amounts it comes out with the same issue - that I over contributed $1,300.

I also tried as you suggested and finishing the HSA portion with only the $650 excess, and then going back in and entering the $650 into HSA account #2 and it puts me right back a the $1,300 excess contribution.

[BillM223]

OK, @mwaltz1, let me have a whack at it...

[BillM223]

First, are you using Online or the CD/desktop software?

Second, how are you making these contributions? Through your/spouse's employer or directly to the HSA custodians? If a mix, please tell me the mix.

NOTE: using the CD/download software and assuming that the entire 7,200 was contributed directly to the HSA custodians (i.e., not through an employer), I was able to add the 650 to your spouse's HSA without increasing the excess - i.e. it still reported only the 650 excess and still remembered that you were withdrawing it.

So, now, please tell me how you contributed these HSA contributions (who made them and through employer or not), and then tell me how you added the 650 to round out to 7,200. I am considering the possibility that you added accidentally to your HSA (which indeed would have just increased the excess) or whether not the platform makes a difference.

@mwaltz1

[Opus 17]

@mwaltz1 

When Turbotax asks what kind of coverage did your spouse have, did you indicate "none" or "family" for January–August?  You should be indicating "family" because she had family coverage even if it was not in her name. 

[mwaltz1]

Yes, for both sets of questions I answered "family plan" for January - August, and "self only" for September - December.

[BillM223]

So, now, please tell me how you contributed these HSA contributions (who made them and through employer or not), and then tell me how you added the 650 to round out to 7,200. Was it on a W-2 or was it a personal/direct contribution? I am considering the possibility that you added accidentally to your HSA (which indeed would have just increased the excess) or whether not the platform makes a difference.

And when I did this test, I showed Self-only for you and your spouse for September-December. But Opus's question makes me wonder - did one of you have the Family HDHP policy, then on September 1st, one of you left it and started a separate Self-only HDHP policy? This means that the other spouse likely would still have the Family policy (if you had dependents on that policy).

So please also confirm that neither of you had a Family HDHP policy from September to December.

[mwaltz1]

$6,650 was paid through (by) employer and reported on W2 for my HSA while under a family plan.

$350 was paid through spouse employer and reported on W2.

$200 was paid directly to spousal HSA account and not reported on W2.

We were both covered under a family plan January - August.  I changed employers and we both went on individual employee plans Sept - December.  Neither of us was covered by a family plan after August.

The question remains consistent - how do I withdraw the $650 excess from the HSA that was tied to my family plan and deposit that to the spousal plan so that we still max out the HSA's, before tax filing.

[mwaltz1]

@BillM223  BTW - I am using  Windows desktop.  TT Premier.

[BillM223]

What I would like to know is how did you enter the $650 to your spouse's account in order to round out your contribution to 7,200?

When I entered it as a personal contribution in your spouse's HSA (increasing the size of the personal contribution already there), TurboTax accepted the amount and ended with only the excess contribution for you of 650 and no excess for your spouse. How does that work for you?

@mwaltz1