Why is my hsa taxed

[Buffy05]

I'm 65 and I don't have Medicare.  Turbo tax is saying my HSA contribution is taxable

[AnnetteB6]

If you have not yet gone through the Health Savings Account (HSA) section under Deductions and Credits, then your contribution will be shown as taxable on your return.  After you have entered the information to verify that you were qualified to make the contribution to the HSA, then it will be removed from the taxable income.

Go to Deductions and Credits > Medical > 1099-SA, HSA, MSA and click Start or Update to get started.

[Buffy05]

Thank you.  I had gone through all of that and it still says it's excess contribution.

[BillM223]

@Buffy05 

As Annette said, you need to go through the HSA interview in order to show that you had HDHP coverage in 2023, otherwise, the contributions will be considered in excess.

What HDHP coverage did you have and for which months? Also, how much did you contribute in 2023?

[fred001]

Your answer FAILS to work.

My wife's withdrew all HSA money and closed the account.  We used ALL of that withdrawal for medical expenses, yet TurboTax continues to increment the tax.  She is over 65 and on Medicare, so we cannot contribute to an HSA anymore.....but that is no excuse for TurboTax to cotinue to tax an HSA withdrawal used for medical payments.

why ?? ??

Please refund me my purchase of turbotax

[BillM223]

There is no issue with TurboTax, which is correctly applying the tax law in this case.

Your spouse made an excess HSA contribution - or, at least, made entries that indicated to TurboTax that she did. Once TurboTax saw that excess contributions were made, then it offered the taxpayer the option of withdrawing the excess contribution. In this case no excess would be carried over to the following year and no 6% excise tax would be applied.

However, it sometime happens that the taxpayer has spent all the money out of the HSA before they find out about the excess contribution, so they cannot withdraw the excess. Most taxpayers would simply allow the excess to be carried over to the next year, where the excess would be applied as a personal contribution and used up.

It does happen, as in your case, that the taxpayer has gone on Medicare, and therefore will never be able to be covered by an HDHP policy without a conflict, thus cannot use up the excess carried over to a subsequent year. 

This creates a catch-22 situation wherein certain taxpayers carryover excess HSA contributions, being charged 6% a year, but there is no method provided wherein the taxpayer can terminate this excess.

We do not have an answer for this catch-22 situation yet.

[lostbear]

I went through the HSA contribution tab completely and it is still taxing me 120 on my 2000 contribution.  Can you tell me why?

[BillM223]

No, I can't, because we in the Community cannot see your private tax data.

However, you can help by going back to the HSA interview and going through it until you get to the HSA Summary. It looks like this (these are numbers from a test, so ignore the numbers here):

Come back and tell us the numbers you see, and we'll work this out.