TurboTax should not be adding your distribution as a contribution. Was the 1099-SA for a distribution used on qualified medical expenses with a distribution code of 1? If so, enter it this way:
When asked about your contributions to your HSA, the employer amount from Box 12 of your W-2 will already be in there. Do not enter any additional contributions unless you made them out-of-pocket. If you had any other contributions, like a rollover from a retirement account, that will count against your contribution limit.
Thank you. This is what I had done and I redid it again. But the message I get shows I made extra contribution equal to what shows on my W-2. This is not right.
The 1099-SA income is only added to your w2 income if it was not used on medical expenses. Do you have the information entered anywhere else in your return besides the W2 contribution? The 1099-SA is for distribution and is only taxable income when not used for medical bills.
Here is an example of what your entries should look like as @RaifH described above
Thank you for the additional explanation. That is EXACTLY how I have filled the info. ad this is the message I get
"you contributed $XXXX (this is equal to amount in W-2) more to your HSAs than you were allowed....."
I am not sure what is missing here??
Under "Your HSA Summary" it shows the entire amount from W-2 box 12 as "Taxable employer Contribution"
The amount of a normal distribution (code '1') on a 1099-SA has nothing to do with excess contributions to your HSA.
From your description (the entire code W amount is made taxable), it sounds like you never showed any HDHP coverage. Did you finish your HSA interview?
What type of HDHP coverage did you have in 2021?
What was the code W amount in box 12 of your W-2?
Did you carry over any excess HSA contributions from 2020?
Bill
Thanks for your response.
My SHA contribution from w-2 is 7180. My carry over from last year (which I believe is an error I missed, but it is what it is) is 1500. my distribution is 6868. code is W in box 12 and 1 in 1099-SA. when I finish everything it tells me I exceeded for 8680 which is the total for 7180+1500.
I have answered all questions as indicated in previous responses.
any idea??!!
If I understand you correctly, the code W amount on your W-2 was $7,180. You carried over $1,500 in excess contributions from the previous year. And TurboTax reported that you had an excess of $8,680. Is that all correct?
You did not tell me what type of HDHP coverage you had in 2021. Family? Self-only? I am going to assume Family from the numbers you are using.
I will repeat what I said above. The fact that your excess in 2021 is the sum of all your contributions and your carryover indicates that you did not finish the HSA interview and tell TurboTax what your HSA coverage was.
Bill
I appreciate you responding to my case.
the answer is yes. you have the numbers correct.
yes, I have a family HDHP
and yes, I finished the interview multiple times. I get to the point where it tells me "You may want to withdraw money from your HSAs" and even chose being taxed for it.
that is what is bothering me. I have not paid extra and should this carry overs to next year. similar to 1500 from last year.
My questions to you above:
@Ashi
OK, the first thing I see is that "The fact that your excess in 2021 is the sum of all your contributions and your carryover ", in your case, that was not true and you didn't notice it.
You (the primary taxpayer) has $7,160 in taxable employer contributions BUT you also have $20 tax-free employer contributions. And your spouse has $200 in taxable employer contributions, but let's look at the primary first.
The fact that you had $20 in tax-free employer contributions means that you did indicate that you had HDHP coverage (or else this would have been zero).
So we have two possibilities:
1. You have a large carryover of excess contributions from 2020
2. You told TurboTax that you had overfunded your HSA in 2020
So, did you have excess contributions to your HSA in 2020? If so, how much? Did you withdraw that excess in early 2021, or did you carry this over to 2021? Look at your 2020 return for form 5329. Is there an amount on line 48? This is the excess your carried to 2021.
Alternatively, if you did have an excess in 2021 but you withdrew it all, you "cured" the excess (as if you never had it). So when you saw the question in the HSA interview asking if you had "overfunded" your HSA in 2020, if you cured the excess for 2020, then you should have answered NO. Did you answer YES and enter an amount of the original excess?
Do you recognize either of these situations?
Thanks a lot for the response.
The excess carry over from last year is 1500. it is shown on the image I posted in the previous message. That is an error because my wife was on her own plan and I was on the family plan. most likely I did not answer one of the questions correctly and hence the 1500.
coming to this year. my contribution is 7160 and hers is 200. for 2 months she was on her own HDHP plan and the rest of the year on the family plan.
The $20 pops up after I enter her HDHP detail. When I enter my own info for being the entire year on HDHP nothing shows up.
I did not contribute $8660 extra this year and all the money was spent on medical. I really do not want this to carry over.
Appreciate your patience and help in answering my question.
Ok, Ashi, this still doesn't work.
You had $1,500 in excess contributions in 2020, which you carried over to 2021.
You contributed through your employer $7,160.
Your spouse contributed through the employer $200.
You say that this gives you an excess of $8,860.
It would do so only if the annual HSA contribution limit were zero for you two. But it can't be since, you showed $20 as "tax-free employer contributions".
Listen, I have no idea what you did, but the only way I can solve this is to see a copy of your return. I am asking you for a "sanitized" version of your return. You don't have to sanitize it, because we have a process in which our server will redact all personally identifiable information and then store the result in our database, given you a "token" which is an identifier so that we can find it.
To send us a token, please do the following:
TurboTax Online:
Click Tax Tools in the menu to the left.
Click Tools, and then
Click Share my file with Agent.
A pop-up message will appear. Click OK to send the sanitized diagnostic copy to us.
Provide the token number that is generated onto this thread.
TurboTax Desktop:
Select Online menu if the customer is using Windows. Select “Help” if using a Mac.
Select Send Tax File to Agent.
A pop-up message will appear, and the customer will select, Send. If using Mac "Send Tax File to TurboTax Agent"
Note: Desktop will save a file to your computer unless you uncheck the box.
Another message will appear. Provide the token number that is generated onto this thread.
At the bottom of your reply (with the token) add "@" "BillM223" (without the space in between) so I will be notified.
This will let us see what is happening on your return. Thanks.
Bill
I really appreciate you responding to my question and helping with this.
Token # 999891
"@""BillM223"
Well, now that I see your return, I realize why I had no idea what was happening. You are showing an excess contribution of $7,180 to an MSA (Archer Medical Savings Account). This reduced your annual HSA contribution limit to 7,200 - 7,180, or $20.
Somehow, you managed to convince TurboTax that you had an MSA, but when you switched to an HSA, you didn't delete any of the MSA entries. I don't know how you did the MSA contributions, because they don't appear on any of your W-2s (it would be an "R" in box 12). You may have entered the 7,180 into the MSA interview as a direct contribution (but you didn't have an MSA). All in all, you made several mistakes, so you will need to be more careful as you go forward.
In any case, you need to the following at a minimum:
1. make a copy of your W-2(s) (if you don't have the paper copies)
2. delete your W-2(s) (use the garbage can icon next to the W-2(s) on the Income screen)
*** Desktop***
3. go to View (at the top), choose Forms, and select the desired form (see list below). Note the Delete Form button at the bottom of the screen.
*** Online ***
3. go to Tax Tools (on the left), and navigate to Tools->Delete a form
4. delete form(s) 1099-SA (if one), 8889-T, 8889-S, 8853-T, 8853-S, 5329-T, and 5329-S.
5. go back and re-add your W-2(s), preferably adding them manually
6. go back and redo the entire HSA interview.
@Ashi
Bill
Thanks a lot. I guess that might be an error from last year. I do have paper copy of w-2s and will try the steps. Will let you know. Appreciate it.
Bill,
I wanted to say THANK YOU for all your help and guidance.
I tried what you described in your message. But had the same error. Eventually I had to go through the form in "View" to figure out where I had added the MSA contribution by error and delete that form. It is now corrected.
THANK YOU SO MUCH. APPRECIATE ALL YOUR HELP.