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Level 3
April 7, 2021
Question

HSA

  • April 7, 2021
  • 2 replies
  • 6 views

We had an HSA account with contribution of $7100 in total in 2020, and used total $6441, the rest should be rolled over to 2021 HSA account. How much is for tax deductible? In turbotax, we are told to have an excess contribution of $7100, and also asked if we want to withdraw all or part of them, we got confused. Please let us know how to fill tax for this part.

    2 replies

    Level 15
    April 7, 2021

    If you are eligible to contribute to an HSA, that money is yours forever.  It doesn't really "roll over", it just stays in the account, like an IRA.

     

    You have done something to indicate you were not eligible or you had an excess contribution.  To be eligible, you or your spouse must be enrolled in a family qualifying HDHP all year, there is a question about this in the HSA interview.  You must also have no "other medical coverage" that would disqualify you.

     

    If you contributed via payroll deduction, that is already captured on your W-2, and you do not enter it later in the program when you are asked for additional contributions.  (All payroll contributions are "employer" contributions, even your own money, since under the tax code what you did was agree to a voluntary salary reduction and the employer contributed for you.). If you entered your HSA contributions again separately, that will create the appearance of an excess contribution and you need to fix that data entry.

    yzgm09Author
    Level 3
    April 7, 2021

    Thanks, it is very helpful.

    Level 15
    April 7, 2021

    @yzgm09 - this is the #1 point of confusion as @Opus 17 perfectly stated.

     

    "If you contributed via payroll deduction, that is already captured on your W-2, and you do not enter it later in the program when you are asked for additional contributions."

     

    When the TT asks about your contributions, it means money you sent directly to the HSA. 

     

    The 'employer' contributions are what is listed with Code W on line 12 of your W-2. Even though that was your money from your wages, the IRS (and TT) calls that 'employer contributions' - and that is why it is confusing/