HSA tax

[dawnkeb]

My total HSA from box W is 4292.  Was enrolled in a HDP and max I could contribute is 4600.  Used 1860 for medical expenses.  When complete, it tells me I need to withdraw 3984.00 by 4/18/22 or get taxed 6%.  Why?

[Mike9241]

you will get messages like this until you complete the 8889 input. we can't see your return nor the form

make sure you do not list the code W contributions on line 1 of the form.  they carry automatically to the form and are treated as employer contributions because your w-2 box 1 wages have already been reduced for your contributions.

[Opus 17]

Two points:

1. You must tell the program you had qualifying HDHP all year.  This question is part of the interview for HSA contributions on the deductions and credits page.  (It also used to be triggered in the middle of the W-2 interview when you added a code W, but maybe they changed the program or maybe you skipped out of the W-2 interview before you got to that step.

2. Don't enter your contribution anywhere except the W-2.  When the program asks later on, did you make any out of pocket contributions, this refers only to contributions you made directly to the bank with after-tax dollars. Employee and employer contribution are only reported on the W-2.  Entering your contributions twice can make it look like you over-contributed. 

[RaifH]

It seems as if TurboTax may not recognize you were covered by an HDHP all year. To verify your entries, please follow these steps:

1. Open (continue) your return in TurboTax, if you don't already have it open.
2. Inside your program, search for 1099-SA;
3. Select Jump To 1099-SA. This will take you to the Tell us about the health-related accounts you had in 2021 screen.
4. Select the appropriate box(es) and Continue.
5. Answer Yes when asked if you used your HSA or MSA to pay for anything.
6. Free Edition or TurboTax Live Basic: Follow the on-screen instructions to upgrade to Deluxe.
7. Enter the info from your 1099-SA (this form cannot be imported).
8. Answer No to Did you inherit this HSA?
9. Under Let's enter your HSA contributions, the $4,292 should already be in there as employer contributions. As @Opus17 said, unless you personally added out-of-pocket money to your HSA, leave Any contributions you personally made at 0
10. Answer No to Did your employer tell you about other contributions? 
11. Assuming you did not also have Medicare, answer No.
12. Answer Yes to Were you covered by a HDHP in 2021? and choose whether it was a family or self-only plan. I assume it was a family plan since the maximum contribution to self-only is $3,600. If it is a self-only plan, you did over-contribute and may have to withdraw some to avoid the 6% penalty. If you did not have the same coverage for every month of 2021, you can choose the months that you had an HDHP by selecting I had different plan types at different times of the year.

[Critter-3]

The HSA is handled in 3 parts in the TT program :

First the contribution:

In most cases, your HSA contribution has already been reported in Box 12 of your W-2 with code W: Employer Contributions to Health Savings Account.

Despite the misleading name, code W reports both your and your employer's contribution. (A better name would be "Contributions to Health Savings Account" but we have no say in the matter.)

So if you put $1,500 in your HSA and your employer matched your contribution, your W-2's Box 12 should have the amount of $3,000 with a code W.

Now, if you made HSA contributions not reported on your W-2 (this is uncommon), we'll ask about that when you step through the Medical section. Look for the questions Were HSA contributions made in 2021? or Do you need to make any adjustments to your HSA contribution amount? Answer Yes and we'll open a screen where you can enter that information.

Next the limitations screen to confirm you are eligible to make the contributions:

Until you complete the HSA portion of the TurboTax interview to establish your eligibility for an HSA contribution, TurboTax will treat the amount entered on the W-2 form as an excess HSA contribution.  In the Deductions and Credits tab complete the HSA section of the Medical expenses area to indicate you were allowed to make the contributions.

 https://ttlc.intuit.com/community/health-care/help/why-am-i-showing-an-excess-hsa-contribution/00/26...

And lastly any distribution:

Here's how to enter your 1099-SA form:

1. Click on Federal Taxes > Wages & Income    [In TT Self-Employed:  Personal > Wages & Income > I'll choose what I work on].
2. In the Less Common Income Income section, click on the Start/Revisit box next to 1099-SA, HSA, MSA.  
3. Continue through the interview, entering the information contained on your 1099-SA.

To enter medical expenses in TurboTax, please follow these steps:

1. Click on Federal Taxes > Deductions & Credits  [In TT Self-Employed:  Personal > Deductions & Credits > I'll choose what I work on].
2. In the Medical section, click on the Start/Revisit box next to Medical Expenses.  
3. Continue through the interview, entering the requested information on your medical expenses.
4. You will be asked to confirm the amount you withdrew from your HSA/MSA to pay for medical expenses.