Excess HSA Contribution Incorrect

Forum|Forum|6 years ago
February 7, 2020
1 reply
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I keep getting told we have an excess contribution to HSA. I wanted to see how to fix issue.

I am covered under my wife's family high deductible insurance plan. The contributions to her HSA are done by her employer and are below the limits of the maximum contribution. I input that information. I am not duplicating the employer contribution when I am asked about contributions to the account.

Now I have a left over HSA from a former job and I input that information also into Turbo Tax. I do not make any contributions to that account. Is this throwing the calculations off?

Just at a lost for solution.

Thanks

klehnhardt

Level 10

When you entered the HSA contribution carried over from your prior job, the program picked that up as a current year contribution. This probably triggered the excess HSA error message.

The software does not keep up with the balance in your HSA accounts. It only looks at the current year contributions and disbursements.

docwellsAuthor

Level 2

I went into the software and unchecked that I had a HSA. It still said we had an excess contribution. Do I need to take my HSA completely out of the software to see if it will correct itself?

ellianajlarson

Level 2

Enter contributions for the tax year only. While you can still use an HSA from a prior job, if you did not make any contributions in 2019, that does not need to be entered. You need not report prior year balances.

The most common error I see when entering HSA contributions are double reporting. Typically, these payroll contributions are reported on your W-2 in box 12 with code W. If that is the case, no other contribution needs to be reported in the software.

Under the Deductions & Credits menu, confirm the following:

Expand the menu for Medical
Click Start/Revisit next to HSA, MSA Contributions
Confirm the account ownership and click Continue
Continue in through the screens until you reach Let's enter your HSA contributions
Stop here. If all of your contributions were through payroll deductions and reported on your W2, do not enter anything on this screen. If that is the case, either leave the box empty or type $0 in the box next to Any contributions you personally made

If it turns out you did have an excess contribution, the following applies. Generally, you must pay a 6% excise tax on excess contributions. See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. The excise tax applies to each tax year the excess contribution remains in the account.

You may withdraw some or all of the excess contributions and avoid paying the excise tax on the amount withdrawn if you meet the following conditions.

You withdraw the excess contributions by the due date, including extensions, of your tax return for the year the contributions were made.
You 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.

Pub 969 Tax-Favored Health Plans

The excess contribution continues. The allowable amount for married jointly is 7000 and my contributions are less than the maximum. My distributions from the account were almost equal to contributions, thus for a full year the balance is less than 1000$.

The only input is the contributions I made per the Box 12 W and yet TurboTax tells me I have made excess contributions. I have NOT made excess contributions, and yet TT says I have.

Where is the information coming from that shows excess??