2 Major Issues With My 2023 HSA - Need Input/Direction Please

[rdom53203]

working on completing my 2023 tax returns and I jus caught 2 major issues

#1 - I set up my 2023 HSA contributions to go to my personal checkings account. I contacted my accounting dept and they stopped as of 12/31/23. However, on my w2 for box 12a, it shows W and $1200.  What can I do to fix this?

#2 - Spouse family plan shows W and $7300.06 for her w2, box 12a.  Couple that with my $1200 contribution above(that technically is incorrect), we would be over the $7750 family max.  So what should we do to resolve that potential issue?

man, at a complete loss here, no idea what to do.

Any input, and direction would be greatly appreciated!!!

[BillM223]

"- I set up my 2023 HSA contributions to go to my personal checkings account" - What does this mean? Why were your HSA contributions not sent to your HSA? Where did the contributions actually go?

"we would be over the $7750 family max.  So what should we do to resolve that potential issue?" - this, at least, will be easy to solve.

When you go through the HSA interview (you and your spouse have separate sub interviews), TurboTax will figure out that you have made excess contributions, in the order of $750.

TurboTax will ask you who made the excess and do you want to withdraw it before April 15, 2024? If you still have the money in the HSA, say, yes, withdraw it from you or your spouse, whoever has the money to do so.

TurboTax will add the excess to your Other Income. The excess will not carry over to next year, so no 6% penalty.

At this point, you are done with it, except that you MUST remember to ask your HSA custodian for the withdrawal of excess contributions before April 15th - they probably have this form on their website. The custodian will send you a check out of the HSA for the amount of the excess.

[rdom53203]

"- I set up my 2023 HSA contributions to go to my personal checkings account" - What does this mean? Why were your HSA contributions not sent to your HSA? Where did the contributions actually go?

^^   At our firm, we are responsible for setting up HSA accounts on our own, as in, the firm offers us HDHP which qualifies us for an HSA but we have to set it up independently ourselves.

Knowing better, I made a big mistake,., when the accounting team reached out to me asking for my banking information for the HSA contributions I gave them my personal checkings account info.  So for 2023, all my HSA contributions just went to my normal checkings account mixed in with my normal banking funds.

So that is why there will be no form 5498-SA or a a 1098-SA since there was never a proper HSA account set up.  HOWEVER, box 12a does show W and $1200 in it so yeah..

Thats the pickle I am in and not sure what do about?  However, does that help me with the whole over contributing limits on HSA family or not?

appreciate and thankful for any and all input!!

p.s. I caught my mistakes when I was trying to do my 2023 taxes.  I have now just before this post opened up a HSA account with Fidelity HSA.  Can't I deposit the $1200 from my personal checkings account into the HSA from Fidelity?

[BillM223]

Does your spouse have her own HSA? I assume she must or else where did her code W amount go?

Since you two have Family HDHP coverage (I assume you do), your annual HSA contribution limit is $7,750 (unless she is 55+, in which case we add $1,000 to it). So you share the 7,750 coverage between you (whether you have one HSA or two). Since your spouse has already contributed 7300.06, the most you can contribute for 2023 is $449.94 (might be $450 depending on how the rounding is done).

However, having said that, you can right now contribute directly to her HSA $450 so long as you make sure the HSA custodian understands that the contribution is for 2023. It's quite possible that there are forms for this on the custodian's website, so go look.

Now, understand what we do on your return and what we do in real life are two different things, because of the "virtual HSA" that your tax return refers to. So far as your tax return is concerned, you did give that money to an HSA, and you just need to deal with the excess. But in real life, you need to send that $450 to a real HSA.

[rdom53203]

phew, what a mess!!

but you are correct, she has a family HDHP, and proper HSA offered thru her employer.  Due to spousal rules(if spouses employer offers a health plan..), I was given the boot and had to get my own individual health plan thru my employer, and then set up my own independent HSA account, which is what lead to this situation.

So, I get what your saying, but with the 4/15 deadline looming, and ease of access, say we go with the 6% penalty scenario. 

From my checkings account(where I had the 2023 contributions go to) may I transfer $1200 into my new Fidelity HSA account, designate it as 2023 HSA contributions, then pay the 6% fee on the $750 excess?

With 2 of the kiddos needing braces this year we will burn thru that $750 super quick, so a $45 charge(6% penalty fee) for exceeding the HSA contribution limit by $750 doesn't seem too bad for me.

I just want to get this resolved as smoothly as possible.
Thoughts?

[RobertB4444 · Accepted solution]

That's fine as long as you don't mind the 6% penalty.  It certainly does solve the problem.

@rdom53203