HSA contribution

[kb-ly]

My wife has an HSA in her name. We want to contribute to this account. How much can we contribute? Are we limited to an individual contribution in her name or can we both contribute up to the family limit?

[BillM223 · Accepted solution]

The annual HSA contribution limit belongs to the HSA, not to any person. So there is one aggregate limit for all the contributors. 

The annual HSA contribution limit for a Family HDHP plan is $7,100. Up to $1,000 is added if the owner of the HSA if 55 or older. Thus the maximum amount that can be contributed to that HSA - no matter how many people were doing the contributing - if $7,100 to $8,100 (depending on the date that the HSA owner turned 55).

To contribute to the HSA, each person contributing must be eligible. This means that the person must be under HDHP coverage and not have any conflicting coverage (other employer coverage, FSA, Medicare, etc.). It is not unusual for one spouse to be eligible and the other not; however, if they have joint checking accounts, then a contribution from that checking account can be considered to be from the one eligible spouse.

Make sense?

[kb-ly]

We are both covered by a family HDHP, but if I put in the amount of $7100, TurboTax tells me my wife has an excess contribution of $2730. It will only allow a contribution of $4730. Any idea why?

[BillM223]

What months did your wife have HDHP coverage? Did she have HDHP coverage on December 1, 2019?

Did she have Medicare coverage at any point in the year?

Did she carryover excess HSA contributions from 2019?

How was this $7,100 contribution made, through an employer or directly to the HSA, or a mixture of both?

[kb-ly]

We both had HDHP coverage all year. She had no Medicare coverage and no excess contributions from 2019.

Her employer contribution was $3730. I am over 65 so I think I see that her additional contribution is limited to  $8100 minus $3730. Is that right?

[kb-ly]

But she is the owner, not me, so shouldn't the limit be $7100 minus $3730? That is, $3370?

[kb-ly]

But she turned 55 in February 2021. Does that still qualify her for the extra $1000 in 2020?

[BillM223]

"But she turned 55 in February 2021. Does that still qualify her for the extra $1000 in 2020?"

Unfortunately, no. But she will get 11/12ths of that $1,000 for 2021.

"Her employer contribution was $3730"

Ah, you did not mention that employer contribution.

As I noted above, the annual HSA contribution limit is for the HSA, no matter how many people (or employers) are contributing to the HSA. 

So in this case, since the employer contributed $3,730, yes, you (well, the entire rest of the world) are limited to contributing no more than $3,730.

BUT you say that TurboTax is allowing $4,730 before it declares an excess. This is almost certainly because you accidently indicated that this is your HSA and not your wife's. Please check this.

[kb-ly]

Thanks for your help. You should know, though, that I correctly identified the HSA as belonging to my wife. The incorrect allowance of $4730 is on TurboTax. Maybe that's something the programmers would like to check. I'll stick to your calculated maximum allowance.

[BillM223]

And your spouse's birthday is really February, 2021? I am in this part of the program every day, and that's not an error I've seen.

To check the item - because the programmers won't check this unless I can provide a test case - I will need your help.

I'm going to need your help to get more information. Please send me a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

***Online Product***

1. Sign into your online account.
2. Locate the Tax Tools on the left hand side of the screen.
3. A Drop down will appear. Click on Share my file with agent.
4. This will generate a message that a diagnostic copy will be created. Click on OK, the tax file gets sanitized and transmitted to us.
5. Please provide the Token Number that was generated onto a response to this thread.

***Desktop Product***

1. Click into your return.
2. Click Online and select "Send Tax File to Agent".
3. This will generate a message that a diagnostic copy will be created. Click on OK, the tax file gets sanitized and transmitted to us.
4. Please provide the Token Number that was generated onto a response to this thread.

If you do, this when you post the token number, please add @ BILLM223 (without the space in between) to the bottom of your post do that I will be notified...thanks!