1099-SA causing efile fail

[henryreisig]

Trying to file taxes and I have 1640 in section 2 that is causing my taxes not to be able to be filed.  The information is correct and section 1 shows 0.00 which is also correct.  What can I do to fix this?

[BillM223]

1640 in section 2 of what? On what line? 0.00 in section 1 of what? on what line???

Remember that we in the Community cannot see your tax return nor the screen you are on - please give us more detail so that we can help you.

[henryreisig]

Basically the issue is that there is money paid into a HSA that is not in use to the amount of 1640 dollars.  Since this amount is reported on the form in box 2 and there is no subsequent withdrawal or use of funds in box 1 (of the 1099-SA form), when I submit the efile, it bounces back and tells me that the information is incorrect.  Even though what is entered is correct.  Is there a way to bypass this problem?  I just want to efile and get it done.

[BillM223]

"there is money paid into a HSA that is not in use" - what does this mean? How is it not in use? If you made contributions to an HSA, it's "in use".

"on the form in box 2 " - on which form, the 1099-SA? You mean on earnings of excess contributions?

Are you trying to say that somebody like your employer contributed $1,640 in 2018 to an HSA when you weren't eligible? And your employer did not withdraw that money themselves? And was this attempted contribution for 2018 or 2019?

Did you report this and was told that it was an excess contribution? Did you withdraw this "excess contribution"? Was the $1,640 reported as Other Income in 2018?

If all that is true (and I really need a better explanation of what is actually happening), then in 2020, you would have received a 1099-SA for the earnings, with a distribution code of 2 in box 3. Box 2 would have the earnings, and box 1 could either be empty or have the $1,640 (it doesn't matter because it won't be used in 2019 anyway).

"tells me that the information is incorrect." Please tell me the exact error. If possible, put a screen shot of this error into your reply, so long as there is no personally identifiable information.

[henryreisig]

Ok.  Go thru the steps to file electronically.  Program does a final return check and then bounces to form 1099-SA stating

"Form 1099-SA (Healthequity Corporate): Box 2:  Earnings on excess contributions should not be greater than Box 1.

Box 2  $1640.00

Then it shows the form.

The form is inside of the tax program itself which will not let me cut and paste  

Can't really do a screenshot because the form itself is rollable and doesn't show in it's entirety.

The contribution itself is from work (employer) 

Line 1 is the amount used for medical expenses over the year and it's $0.00

So basically I am covered under a regular insurance and there is an amount that the company puts in to the HSA in case of large budget item like surgery etc.  This amount by the company was 1640.00

I did not have any large expenditures last year so usage is 0.00 

This makes box 2 (Earnings on excess contributions) larger than box 1 (Gross distribution).  From the looks of things, this information was pulled from my W-2

Since this error happens, the software will send me back into checking the return mode and fail it for the same reason every time.

Should I just set the amount to $0.00  ?  But that would appear a little fraudulent in my opinion as the information is not fully provided.

[BillM223]

OK, I still need to know what happened.

In which year (2018 or 2019) did you have this "excess contribution"?

Is there a code W amount on box 12 on your W-2?

Did TurboTax tell you about an excess contribution?

What was the amount of the excess?

Was $1,640 the actual excess contribution or the earnings? I have to say that with interest rates the way they are, it is highly unlikely that the earnings of the excess contributions while they were inside your HSA could be a number anywhere near this large.

When did you contact the HSA custodian to ask to withdraw the excess?

"From the looks of things, this information was pulled from my W-2" - by this, do you mean that the code W amount in box 12 on your W-2 is the $1,640? If this is the case, then the 1099-SA is wrong. Box 2 should have the earnings (like 3% interest or something), not the entire excess that was withdrawn. That amount belongs in box 1.

How did you answer the question "Excess contributions deducted from your wages?" Yes or No?

[henryreisig]

So the year was 2019.  The HSA money will roll over into 2020.  There is a code W for the amount in question (which is 1640).

Turbo tax defaults to tell me about this excess contribution of 1640 (the amount my employer put in the HSA) when I try to file stating that it is an error.

I did not ask the custodian to withdraw the money as it was the "employer's" contribution not mine.  

How did you answer the question "Excess contributions deducted from your wages?" Yes or No? NO

[henryreisig]

In addendum, all of this information was processed by Turbotax automatically.  It actually imported the W2 from my employer automatically.   So if I sound confused at times, it's because this is the first time I have had to break down where these forms are and actually look at them.

[BillM223]

@henryreisig

No problem - for such a great tax benefit, the IRS explanations are surprisingly obscure.

OK, let me confirm...

"I am covered under a regular insurance" - Is this a High Deductible Health Plan (HDHP) or not?  Your insurance card will probably say HDHP if it is, and your HR people will know for sure - oh, and the insurance company, too.

If you are not covered by an HDHP, then you and your employer can't contribute to an HSA. I am assuming that this is the case unless you tell me otherwise. If so, hopefully the company won't do it again next year.

"I did not ask the custodian to withdraw the money as it was the "employer's" contribution not mine.  " - actually, the employer contribution (code W in box 12 of the W-2) includes both what the employer contributes AND what you contribute through payroll deduction. So if the employer declines to withdraw the excess, you can, because in many cases it was your contribution anyway. But if it was their contribution and they made a mistake in making the contribution, then they had the right to request the withdrawal.

But since you got a 1099-SA reporting it, the employer must have done it.

"How did you answer the question "Excess contributions deducted from your wages?" Yes or No? NO" - actually, you should answer this ""yes", because probably all of the contributions to your HSA were done through your employer (i.e., the code W amount).

OK, you are saying that the reported excess was $1,640 and that the box 2 entry on the 1099-SA was $1,640. This is simply wrong - this amount should have been in Box 1 (Gross Distribution). Box 2 is for the earnings that this excess made while it was in the HSA - you would expect this amount to be only a few dollars, given the current interest rates.

So we can't make this work until your HSA custodian corrects the 1099-SA. Please contact them and ask for a corrected 1099-SA. 

If they can't do that today or tomorrow (probably not), you should consider filing an extension (form 4868) if you are getting a refund or have a good idea of what you will owe. This is easier than filing now and then amending later when you get the corrected form.

Please see this TurboTax FAQ on how to file an extension.