Back in 2021, when I started filling out my taxes with TurboTax, I mistakenly entered my prior year contribution as an excess contribution. And, since then, I have been paying a 6% additional tax on that amount. I was confused enough by the process that I didn't understand what I was doing at the time. However, now that I understand what I did, I have questions about how to correct the issue.
For this year's taxes, on form 5329, I have an excess contribution from previous form 5329s. Is it possible to correct this on the current tax forms, or do I need to go back and correct previous tax forms first?
If I correct previous tax forms, is it possible to get my excess tax contribution back?
Thank you.
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Hi! So sorry that happened! The good news is that there is a way to fix it, but it will require some careful work on your part. The cleanest way to correct an error made in previously filed tax returns is to amend those previous tax returns – one at a time -- starting with the return you filed for tax year in which you made the initial error. You should not attempt to correct this on your current tax return.
Assuming you used TurboTax to prepare your previous return(s), please follow the instruction in this article: How do I amend my federal tax return for a prior year? You can also amend any state return using the same procedure.
You have 3 years after the date you filed the original tax return or within 2 years after you paid the tax due on the original return, whichever is later, to amend. See this TurboTax article: What is the deadline for filing an amended return?
As mentioned, prepare and file the amendment for the first tax year you mistakenly entered your HSA contribution as an excess contribution. You’ll also then have to amend your subsequent returns because, as you know, the penalty was assessed each tax year that the mistaken excess contributions remained in your account. You should see a refund of the amount you overpaid in the prior original returns.
I hope this is helpful.
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