How does TT handle HSA contribution made for previous year that is also listed on 5498-SA for current year?

[Bitsy]

I made a personal HSA contribution in 2017 which was correctly applied to 2016, and reflected correctly on my 2016 5498-SA in box 3.  The amount is also listed on my 2017 5498-SA in box 1, but if I enter it as a 2017 contribution that would end up being wrong, I only made the one contribution, especially since I wasn't in a qualifying HDHP in 2017 and was not qualified to contribute anything for 2017.  Do I just subtract the amount contributed for 2016 from the amount reported for 2017 before entering in TT, or will the question be asked somewhere down the road and the situation corrected?

[Critter]

Well the form is wrong ... have the issuer correct it. 

[Bitsy]

Thanks for your reply - I contacted them, they assured me it IS correctly reported that way, but couldn't give me any tax advice about how to handle it.  I did find the following reply to someone else's previous question:

"Any HSA contribution made in 2017 should appear in box 2 of the 2017 Form 5498 regardless of whether the contribution was for 2016 or 2017.  If this contribution was made for 2016, it should also be present in box 3 of your 2016 Form 5498-SA.  The HSA contributions for any given year is the sum of the box 2 and box 3 amounts on that year's Form 5498-SA minus any amount in box 2 that represents a contribution reported in box 3 of the previous year's Form 5498-SA." (dmertz)

I'm taking that to mean I should subtract the 2016 amount contributed in 2017 from the amount reported on the 2017 form, and report that amount, which is zero, in TT.

[dmertz]

Box 1 of Form 5498-SA is only for reporting contributions to an Archer MSA, not for reporting HSA contributions.  If the account is an HSA, the custodian must not make any entry in box 1.

It's hard to believe that an HSA custodian would make such a reporting mistake.  Are your sure the amount of your contribution made for 2016 in 2017 isn't in box 2 of the 2017 Form 5498-SA (where it should be in addition to appearing in box 3 of the 2016 Form 5498-SA).

[Bitsy]

dmertz, thanks for noticing this, especially since I quoted you - yes, you're right it was (correctly) in Box 2 for 2017, not Box 1.  I only made the one contribution during 2017 and it was counted toward 2016, but listed on the 5498-SA for both years, in different/appropriate boxes.  So I did the subtracting and entered zero in TT for the contribution made in 2017, based on your previous answer to the other person.  That makes sense, but I wish it was spelled out more clearly on the forms 5498-SA. 

Would it be advisable to enclose an explanatory note, or is the IRS used to this and will figure it out without my help?  Seems like less is more with them....

[Critter]

Well ... the 5498 form is informational ONLY and is only used to assist you in making the correct entries in the TT program ... in the HSA section if you made no contributions for that tax year you could have simply continued on ... entering a zero was not required.

[dmertz]

There is no need for an explanatory note with regard to this. The IRS is responsible for the instructions for Form 5498-SA which specify that an HSA contribution made between January 1 and April 15 for the previous year is to be included on both years' Forms 5498-SA in the way described, so the IRS should understand what is expected under these circumstances.  It's quite common for people to make such an HSA contribution and receive reporting similar to yours.  As you found, the contribution reported by the HSA custodian for 2017 ($0) is the amount in box 2 of the 2017 Form 5498-SA minus the amount in box 3 of the 2016 Form 5498-SA (the total amount contributed in 2017 minus the amount contributed in 2017 that was for 2016).