HSA excess contribution

[vhomer1977]

Hi,

In Jan 2020, my employer deducted $5300 x 2 (total $10600) from my paycheck as HSA contributions

In Feb 2020, I caught the mistake and called my HSA and withdrew $5300

Over the course of the year, employer contributed $1800 to the HSA.  

So in summary total contribution $7100 per max limit for family HSA and excess $5300 which was withdrawn. 

No qualified medical distributions were made in 2020.

So I believe I have to pay taxes on excess contributions....but how do i do it? 

form 8889

lines

1. Family

2. 10600

3. 7100

4. blank

5. 7100

6. 7100

7. blank

8. 7100

9. 1800

10. blank

11. 1800

12. 5300

13. 5300  (Is this correct?)

Do I fill out part II?  

thank you for you help

[BillM223]

First, was this HSA contribution reported in box 12 with a code of W on your W-2?

If so, then the amount on line 2 should be zero - "do not include employer contributions" which includes anything on your W-2.

If the total of $12,400 was reported in box 12 on your W-2, then line 9 should have 12,400.

Line 13 is not correct if the whole 12,400 was in box 12 on your W-2.

So, two questions:

1. The 10,600 that was "deducted" from your paycheck - was it reported on your W-2 in box 12? What was in box 12? 10,600? 1,800? 12,400?

2. Was the 10,600 removed by your employer from Wages in boxes 1, 3, and 5 on your W-2 (you can't tell from looking at your W-2, you have to ask your employer)?

Employee contributions made by means of payroll deductions are NOT considered "personal contributions" and so should not be entered on the second line on the "Let's enter [name]'s HSA contributions" screen as a "personal" contribution, because it is already in the first line as an "employer contribution" (which means only that it was reported correctly on your W-2).

Let me know what your employer actually did. Please put at the bottom of the post @ BILLM223 (without the space in between) so I will be notified of your response. 

[vhomer1977]

Hello,

Thanks for the response!

1) W2 box 12 shows 10600

2) I work for DFAS - civilian employee, difficult to get a hold of someone to explain breakdowns for box 1 and 5.  Trying and will post if I find something

$1800 contributed to HSA via pass through premiums from HDHP plan -  I presume that counts as employer contributions.  So my entire amount would be [removed] = 12400 .   I withdrew $5300 from HSA so total would be $7100 ( max limit)

thanks

@ BILLM223

[BillM223]

Yes, I have heard that getting information from DFAS on HSA issues can be difficult.

The pass-through amount may have been included as part of your HDHP premium, which is found also in box 12 with a code of DD (the amount here is the sum of what you paid and what your employer paid for health insurance premiums).

If the pass-through amount of $1,800 was included here, then you are OK - it was also removed from Wages in boxes 1, 3, and 5 on your W-2.

To enter the $1,800 as an HSA contribution, please do the following:

• Go to Federal Taxes->Deductions & Credits->Medical and click on "HSA MSA Contributions".
• Go to the screen entitled "Did your employer tell you about any other contributions?" 
• Click on "yes" to exposes the bottom three lines
• Enter the amount of the pass-through on the last line ("Employer and payroll contributions not reported in box 12 of your W-2")

Now TurboTax will know that $12,400 was contributed to your HSA and calculate the correct excess of $5,300.

We want TurboTax to calculate the excess, because otherwise form 8889 won't be populated correctly (you can't do it directly).

P.S. My comments about lines 2, 9, and 13 above are still correct - line 2 should be zero, line 9 should be 12,400, and line 13 should be zero (and maybe line 12, too).

Do you enter different values in Forms mode? Please don't, just let TurboTax do its thing.

[vhomer1977]

Hello,

I calculated manually and the pass-through amount of $1,800 was included in box 12 with a code of DD

I will try your suggestion ...thanks

@BillM223 

[BillM223]

@vhomer1977

Thanks for confirming that the pass-through is in the amount with code DD.

[vhomer1977]

Why does the HSA not submit the contribution summary prior to tax filing date? Why send it post deadline? 

[BillM223]

"Why does the HSA not submit the contribution summary prior to tax filing date? Why send it post deadline? "

What are you talking about? The 5498-SA?

This is sent by the HSA after the due date, because you are able to make HSA contributions for the previous year up until the due date of the return - making any already printed 5498-SA wrong.

So the IRS permits the HSAs to wait until after the due date of the return to send you the 5498-SA. This way, they have to send only one 5498-SA.

Make sense?

[vhomer1977]

ah ok did not realize that part... yes makes sense now!