Incorrect Excess HSA Contribution

Forum|Forum|6 years ago
March 6, 2020
1 reply
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My wife and I contributed $6000 to an HSA account in 2019. We have a 1099-SA which shows Gross Distributions of $3180 (Distribution Code 1). After entering this data, Turbo Tax is showing the entire $6000 an EXCESS HSA Contribution for 2019 and advises me to withdraw the entire $6000 from the account.

Turbo Tax seems to be ignoring the data entered from the 1099. It shows whatever 2019 HSA contribution amount I enter as the excess HSA amount. e.g. I changed the 2019 contribution to $3180 and Turbo Tax returned a 2019 excess payment of $3180.

Opus 17

Level 15

A regular withdrawal for medical expenses is not the same as a withdrawal of excess (unallowed) contributions.

First, if you and your spouse were enrolled in HSA-eligible insurance for the entire year, your limit would be $7000 (unless over age 55 which would raise your limit.)

If you are being told you have excess, the most likely reason is you did not finish the interview and are jumping around from piece to piece. Turbotax assumes your contributions are non-allowed until you finish the health insurance interview and tell the program that you had qualifying HDHP insurance and were not covered by any other insurance for the whole year. I believe this can be accessed both from the 1099-SA interview and from the HSA interview on the deductions and credits page. Make sure you complete these sections.

If you did not have eligible contributions, and indeed had excess (not allowed) contributions, then to withdraw them is a special procedure, not a regular withdrawal. If you withdrew money through normal channels you must use it for medical expenses or it is subject to income tax and a penalty.

stanshoeAuthor

Level 2

Thank you. I failed to answer the question about HDHC coverage so as you said, the program assumed all payments were non-deductible. Answering that question solved the problem.