FSA and HSA contribute in same year

[chenm003]

Hello,

When I fill tax return with Turbotax, I mees a warning that HSA and FSA can't in same year, I don't know how to input it now.

Background,

In the 2023, my family have coverage by only one HDHP medical insurance plan entire year, we have not second medical insurance.

We meets maximum deductible and out of pocket at May 2023, after that, the FSA 2024 plan enroll start at July 2023 (plan year is July 1st, 2023 - June 30, 2024), the employer enrolled me into that plan (FSA account only, no medical insueance cover), my spouse is homemaker, no income.

I contibute $7750 HSA and $1500 FSA in 2023 year, it both shows on my W2

All medical paid without reimbursement, I means we didn't reimbursement any cost from both HSA and FSA account in entire 2023.

My question is how to fill HSA and FSA in turbotax? or need we withdraw something from account? Thanks.

[Mike9241 · Accepted solution]

you need to proceed as follows for Turbotax to give you the correct answer for the HSA limit.

when it asks you the type of HDHP coverage you had during the year you must answer that you had different types.  then on the next screen, you must check none for the type of HDHP you had for each month that the FSA covered medical expenses. Generally, they only cover expenses incurred during the plan year. nothing before and nothing after, but this should be checked out with your payroll or human resource department.

so in the situation where the FSA only covers medical expenses incurred starting in July you would have to withdraw 1/2 of the 7750 + earnings thereon. By law an FSA must cover both spouses and qualifying dependents so there was disqualifying coverage for the "family" for the last 1/2 of the year. The HSA contribution is prorated by month so you're allowed only 1/2 of a full year's contribution. You have until 4/15 to withdraw the excess and earnings thereon. otherwise, you'll have penalties for 2023 and ensuing years until the HSA is exhausted.

since the HSA was through payroll deductions line 1 of your w-2 was reduced by your HSA contributions, thus 1/2 of your contributions becomes taxable income as well as 1/2 of any employer matching contributions. ($3875) will appear as income on schedule 1 line 8f.     

other than on the W-2 FSA info is not entered elsewhere in your return.