HSA Excess Deduction Calculation

[Joe M]

Not sure what I am missing.

TT figures my max contribution as $675. I put in $1296 or I am over $621.

TT figures my spouse (married filing jointly) max contribution at $4846. She put in $4550 or under $296

Moving to the next screen TT then states I have over contributed $917

TT seems to be adding the over and under ?

Anybody know what I am missing and why my over is not either $296-$621 or maybe just $621

[BillM223]

"TT figures my max contribution " The screens in the HSA interview that claim to show your mx contribution limit has a problem when you have Family coverage under your HDHP plan.

It calculates your max ignoring the spouse.

If you have Family overage on your HDHP plan, then you and your spouse share the $7,100 annual HSA contribution limit. So when TurboTax calculates the limit for one of you, it should not allow the other spouse to use the same monthly limit.

In any case, don't depend on those max numbers if you have Family coverage.

What you need to do (if you will) is to do the following:

1. Tell us how many HSAs you have and who owns them (each spouse can have an HSA, there is no such thing as a joint HSA).

2. What kind of HDHP coverage you have: Self-Only for one of you, Family, or did each of you have Self-Only from two different HDHP policies.

3. How much did each of you actually contribute and to which HSA.

4. The ages of both you and your spouse (based on your numbers, I am guessing that at least one of you is 55 or older).

Add to your reply @ plus BillM223 (no space between them), so that I will see that you responded.

[Joe M]

@ plus BillM223

Thanks

HSA for each spouse

#1 Family 1 month Medicare 11 months  $1296 2020 contribution Over 55

#2 Family 1 month Self 11 months $4550 2020 contribution Over 55

My actual calculations that I figure on proper max contribution do not match TT but I was juts going to go with the flow.

Can I file with different number that TT says is proper? will the software make a fuss?

Think TT is going to fix this?

[dmertz]

What TurboTax initially tells you is each spouse's maximum contribution without regard to any contribution made by the other spouse.  In your case your maximum contribution for you 1 month of eligibility is $8,100 / 12 = $675 as TurboTax indicated.

For your Spouse's maximum contribution without regard to your contribution is $8,100 / 12 +11 * $4,550 /12 = $4,846 (rounded).

However, the the regular family limit of $592 (rounded) for the month that you had family coverage is shared between the two of you, so when taking both of your contributions into account your maximum combined contribution is contribution between the two of you is $4,929, your spouse's maximum contribution of $4,846 plus just your catch-up contribution of $1000 / 12 = $83.

Since, you've contributed $1,296 to your HSA, that's $621 more than the maximum that you are permitted to have contributed, without regard for your spouse's contribution you have contributed $621 more than permitted.  However, removing just $621 from your HSA would leave your spouse with an excess contribution of $296 due to the combined limit of $4,929.  Since you have an excess contribution to your HSA regardless of anything else, simplest would be for you to obtain a return of contribution of $621 (your own excess) + $296 (the shared excess) = $917 from your HSA, leaving you with a net contribution of $379.  Adding that $379 to your spouse's contribution of $4,550, that gives you a total of $4,929, the maximum combined amount permitted.

To get the correct result in TurboTax, you would tell TurboTax that you made the $1,296 contribution, that your spouse made the $4,550 contribution, that you want to split the $592 between the two of you as $296 each, then indicate that you will remove $917 from your HSA by an explicit return of excess contribution.

[Joe M]

Thanks @BillM223

Thanks  @dmertz 

I get it. Seems that TT knows we are MarriedFJ so you would think they would have an interim page with a notification regarding the background of the final max contribution numbers numbers varying as a result on the combination of the Primary and Spousal contributions.

[BillM223]

@dmertz - that's what I get for going to dinner 😉

@Joe M Oh, when I said @ plus BillM223, I meant for you to take the plus out and concatenate the @ and BillM223 together (I would write it myself, but then I would be notifying myself 😉 ).

Let me lay this out in a table, because it seems to me a little bit easier to understand. I am avoiding talking about a shared excess, because - as dmertz knows - each HSA has its own excess, depending on how much of that $592 from January we allocate to each HSA.

dmertz, "$8,100 / 12 +11 * $4,550 /12 = $4,846" this is your computation of the spouse's HSA contribution limit. But this formula should not use 8,100, because that is allocating the taxpayer's 55+ bonus (one month of it) to the spouse's HSA. Doesn't the taxpayer's 55+ bonus belong exclusively to the taxpayer's HSA which can't be shared with the spouse? Shouldn't the spouse's limit be 4,763 in this case?

You

January Family 592 (this is 7,100 times 1/12)

Medicare – Feb to Dec – 0 No limit allowed

55+ - 83 (this is $1,000 times 1/12)

Total – $675

Contribution – $1296

your Excess = $621

Your spouse

January Family – 0 (remember that you and your spouse share that $592, and we gave it all to you)

Self – Feb to Dec – 3,254 (3,550 times 11/12)

55+ - 917 ($1,000 times 11/12)

Total – 4,171

Contribution – 4550

Excess = 379

So, as I see it, you can remove $621 in excess and your spouse can remove $379.

If you want to leave more money in your spouse's HSA, then you can assign part of the one month of Family coverage to your spouse rather than you.

Your spouse needs $379 in order to have the HSA limit match the actual contribution. So we remove that $379 from your $592 for January to get $213. 

This would give you a limit of $296 (the one month of $1,000 times 1/12 plus the $213 of Family coverage that you are keeping), and it would give your spouse a limit of $4,550, which is the original $4,171 plus the $379 from January.

In this case, your spouse would not have an excess, while you would have an excess of $1,000 which you should withdraw before April 15th, if you can. 

[Joe M]

@BillM223 

@dmertz 

While your answers are a bit different I get the gist and thank you both very much. Not sure if TT monitors these post but if they do....

• Given me more or less info when I go thru the screens. Either would make it less confusing
• How about a detailed HSA contribution calculator that I could have used to make the contribution. I have yet to find one that works well in all circumstances, especially the Medicare transitions for a married couple.