In 2015, I started working and contributing to my HSA. I qualified for the HSA, but while I was filing my taxes, I answered the questions incorrectly and my HSA contributions were filed as an overcontribution. Ever since 2015, I've been paying taxes on the excess amount on form 5329.
I would like to go back and amend my taxes, but the statute of limitations no longer covers amending my 2015 tax returns. How can I go about correcting this so I don't pay taxes again on this mis-labeled "excess" amount, without having to withdraw from my HSA?
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What did you do vis-a-vis the HSA in tax years 2016, 2017, and 2018? Did you have an HDHP in those years (i.e., qualified to contribute to your HSA)? Did you make contributions to your HSA in those years? If so, did you make full contributions or did you reduce the contributions in the next year to "charge off" the carryover of the excess?
One possibility is this. When you have excess contributions in one year, there are two preferable choices: (1) withdraw the excess before the due date of the return), and (2) you carry over the excess to the next year and reduce your next year contributions so that the your new contributions and your carryover still add up to less than or equal to the net year's annual HSA contribution limit. (this "charges off) the carryover and eliminates it).
HOWEVER, it is not uncommon for taxpayers to misunderstand the question in TurboTax that asks if you had a overfunding in the previous year. If you actually had withdrawn the excess before the return's due date, then you should have answered "No" (perhaps you know this now). The question should actually ask if you CARRIED OVER any excess. Answering "yes." when you shouldn't often causes the excess to perpetuate.
If this is your situation, then you can amend the 2016 return to answer "no" which will likely eliminate the excess in 2016 (and then you amend 2017 and 2018 if already filed).
Of course, I am just guessing that this is your situation. If it's not, please tell us the amount of the excess carried over from 2015, and how much you contributed in 2016, 2017, and 2018. Also add in your HDHP coverage in each year (Single or Family or mixed). With luck we can find a way to modify 2016 and thereby cut off your carryovers.
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