HSA - Excess Contribuition Form support by turbotax agent?

[efrain111]

Hi,

I bought the Deluxe packet from Costco and I was wondering if I can get agent support for a non-tax-return related topic? This is, I over-contributed to my HSA last year and I had to file a HSA Contribution Removal form. However, I failed to calculate the Earnings in Excess myself and I got the form back from HSA-bank. Sadly, I was abroad when that letter (the one saying the amount was incorrect) was sent to my address and I just read it yesterday so that I missed the Apr18 deadline to make that correction. :( Now I'm wondering whether I have to get in touch with a tax specialist physically or if I have such service as part of the Deluxe packet I bought? Also, my tax return said that I would be getting some money from IRS and because of that I guess I won't need to pay any penalties due to my delay on filing the HSA Contribution Removal form?

Thanks.

[taxlady28]

There is no Live support with desktop version of TurboTax.  Consult a local tax preparer for assistance or switch to online TurboTax for Live or Full Service help.

[Mike9241 · Accepted solution]

assuming your return was not on extension, you misunderstand. that excess was not removed  by the due date of 4/18 assuming you filed, but see exception next for late removal after filing, so you will pay a 6% penalty on the lesser of the excess contribution or the Fair value of the HSA account on 12/31/2022.  I think your custodian wimped out by not computing the earnings on the excess, many do. 

FROM PUB 969 HSA section  exception 

Note. If you timely filed your return without withdrawing the excess contributions, you can still make the
withdrawal no later than 6 months after the due date of your tax return, excluding extensions. If you do, file an
amended return with “Filed pursuant to section 301.9100-2” written at the top. Include an explanation of the
withdrawal. Make all necessary changes on the amended return (for example, if you reported the
contributions as excess contributions on your original return, include an amended Form 5329 reflecting that the withdrawn contributions are no longer treated as having been contributed),.

The earnings would be taxed. 

now if your return was on extension different rules apply since you seem to have withdrawn the excess by the due date. no 6% penalty and only the earnings get taxed - no penalty. 

[efrain111]

Thanks for your response. It is very helpful!!

My return was not on extension and it was filed with the assumption that the "HSA excess contribution removal form" was going to be submitted before April18. This is, I recall a question from the SW asking whether I would be withdrawing the excess of contributions before Apr18 or not. I chose "Yes" to such question which means that no amendment is needed if I understood you right?

Your support is appreciated 🙂

[Mike9241]

you answered wrong on your return by saying yes when it in fact did not happen. so what the IRS gets from the HSA custodian and what you reported will differ.  you may get a notice from the IRS at which time you can respond accordingly. also you are required to report any earnings on the 2022 return

from the instructions for form 5329 HSA section

If you timely filed your return without withdrawing the excess
contributions, you can still make the withdrawal no later than 6
months after the due date of your tax return, excluding
extensions. If you do, file an amended return with “Filed pursuant
to section 301.9100-2” entered at the top. Report any related
earnings for 2022 on the amended return and include an
explanation of the withdrawal. Make any other necessary
changes on the amended return (for example, if you reported the
contributions as excess contributions on your original return,
include an amended Form 5329 reflecting that the withdrawn
contributions are no longer treated as having been contributed)e form 5329 instructions for HSA