HSA Excess contribution confusion

Forum|Forum|6 years ago
January 28, 2020
5 replies
58 views

I had a total contribution of $1300 to my HSA. The limit is $3500. However, I was sent a 5498-sa form this year. And turbotax is auto-calculating my excess contribution to be $1300, the exact amount of my total contribution. What is going on? My HSA bank even verified that I should not be penalized since I was more than $2000 UNDER the limit. Can anyone explain what’s going on?

TurboTax Deluxe Online

klehnhardt

Level 10

When your W-2 indicates that you contributed to an HSA you need to go the HSA section in the software to answer the questions on the contribution.

Locate the Search Magnifying Glass in the upper right hand corner of the screen.
Enter HSA in the search box and hit Enter.
Select Jump to hsa.
Answer questions on your HSA contribution.

brbic

Level 2

I have a similar problem. Turbotax says that my entire HSA contribution of $2400 is taxable (plus penalty) because I "said" that someone else was going to claim me as a dependent. However, I didn't say that in the section on basic info. I said that someone "could" claim me, but they were "not going" to claim me. No matter what I do, Turbotax says the "are" going to claim me, therefore the HSA contribution is taxable. I tried TaxSlayer, and they have it correct. I always used Turbotax because I thought they would be more accurate, but not this time.

BillM223

Level 15

The test for not being allowed to contribute to an HSA is whether or not you can be claimed as a dependent, not whether or not you are claimed as a dependent.

The US Tax Code in Section 223 says "(6)Denial of deduction to dependents

No deduction shall be allowed under this section to any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable year begins." See US Tax Code Section 223.

Section 151 refers to the ability to take a dependent. Like much of the tax code, this is convoluted language, but it says (in translation) "No deduction for contributions to an HSA is allowable to anyone who can be claimed as a dependent by another taxpayer." It does not make any distinction for those who were actually claimed.

Therefore, TurboTax is handling the HSA contributions correctly.

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brbic

Level 2

I respectfully reply that that interpretation is not correct. The deduction is not available to anyone else. The HSA contributions are mine alone because I have a HDHP and the HSA through my employer. It is not related to my parents, who COULD have claimed me - but did not. There is no way they could get a deduction for the HSA contributions that my company made for me. BTW, TaxSlayer and the IRS Free File programs both got this correct. Only Turbotax screwed it up.