HSA contribution wrong tax year

[anonymous283]

I personally made a HSA contribution in January 2022 which I accidentally added to tax year 2021. I filed my taxes not knowing this so the contribution does not show up anywhere as reduced taxable income. I now want to move that contribution from 2021 to 2022. I already spoke with my HSA about filling a mistaken HSA contribution form but they say I need to talk to the IRS or tax professional. Sounds like a huge ordeal when it really should be rather simple.

[BillM223]

"which I accidentally added to tax year 2021." - So did you make the contribution after January 1, 2022, but actually told the HSA custodian that it was tax year 2021? That's not usually an accident (usually, the accident is making the contribution in 2022 and NOT saying it was for 2021).

"I filed my taxes not knowing this so the contribution does not show up anywhere as reduced taxable income." What were you not knowing? Which year the contribution counted for or that which year it was supposed to show up as reduced taxable income?

Did you have excess HSA contributions for 2021? If not, why don't you just take the deduction in 2021?

I don't understand your situation, because most taxpayers would prefer to do what you accidentally did. Please give me more detail.

[anonymous283]

I made the contribution after January 1 on my own through my HSA website where it asks me what tax year to use for the contribution. I picked 2021 when I meant 2022. I did not and never have made excess contributions. Yea I guess I'm not like most people. I want my 2022 salary reduced by the contribution as it wasn't in my 2021 tax return.

[BillM223]

"I did not and never have made excess contributions." Too bad, it would have given us a way to deal with this.

OK. I am not sure why your HSA custodian wants you to consult with a tax professional. Either the HSA custodian will make the change or they won't. They don't have to make the change if their internal rules don't allow it.

Let's try this. Look at the "Excess Contribution Contribution and Deposit Deposit Correction Correction Request Request Form" for Optum Bank/Financial, #2 Withdrawal/Distribution Type, third entry (Individual Contribution tax year correction.)

Make the argument (but in the nicest way, but they can sit pat and refuse) that Optum Bank, one of their competitors, appears to let you move the contribution from one year to another, so why won't they (your HSA custodian)?

Now, it could be that Optum Bank won't allow this either because it's after April 15, 2022, but perhaps your customer service rep won't know that. Plus, this gives you some forms to look for on your own HSA custodian's website.

Note that we in the Community don't have access to the internal rules of HSA custodians, but you can give them a chance to help you out.

[anonymous283]

I called them twice and they've given me 2 forms which don't allow me to do what the Optum form does which is move contributions from one year to another. Their forms want to return the contribution as a check. I'm just going to fill out my 2022 tax return with the contribution and be done with it. The IRS got more money than the should have in 2021 this just corrects it.

[BillM223]

"Their forms want to return the contribution as a check. " This would be normal for an excess contribution, however, you can't withdraw an excess contribution when you didn't make one.

Any chance that this operation (sending you a check) would remove the HSA contribution from 2021 in their books? That would be great, because you just turn around and send the money back to them by April 18th as a contribution, which could (if properly marked) would count for 2022.

This is what is important, getting them to change their books so that the original contribution does not not appear to apply to 2021. You still have time to apply the contribution to 2022. 

Whatever you do (if you do what you said in the last post), keep all your documentation. If you are ever audited, the IRS will likely tell you to amend your 2021 return to add the HSA contribution to that year (if it is not too late to amend), and then to remove the contribution from the 2022 return. 

[Mike9241]

I'm just going to fill out my 2022 tax return with the contribution and be done with it. The IRS got more money than the should have in 2021 this just corrects it.

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probably won't work. the HSA custodian reports to the IRS what you denoted as 2022 contributions while you'll be reporting more. expect a notice from them if you do this.

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you may even eventually get a notice from the IRS for 2021 because the HSA custodian reported more than you. 

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these notices may never show up or could take a year or two

i would say the best thing to do would be to amend 2021.

then if you want you can transfer any funds from the current HSA a/c to a new one that allows corrections in situations like yours.