Question

Contributed and used both FSA (spouse) and HSA (mine) in 2020. How to fix?

Forum|Forum|5 years ago
March 12, 2021
1 reply
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We used FSA completely and HSA (has employer match) partially in 2020.

How do I fix this while filing taxes? Where do I report these?

TurboTax Premier Online

S

sls50211

The FSA is pre-tax dollars used for medical expenses. Expenses are normally submitted for reimbursement through your third party FSA plan administrator. There is no tax impacts for submitting or receiving payments as spouse's salary has been lowered by the amount elected for the FSA.

The amounts paid through taxpayer's HSA are reported to you on 1099-SA with deposits reported through your W-2 with code W in box 12. These amount are also deposited to your HSA account with pre-tax dollars. Unless you doubled dip and paid the same healthcare expense from both plans, there is no additional reporting needed. You should have received the 1099-SA for any distributions made in 2020. After you have logged in and are in your return:

Go to Search at the top of the screen.
Enter Form 1099-SA in the search box.
You will see a Jump To function that will take you to the 1099-SA input screens.
Then add the 1099-SA in screens that follow.

There you will enter your HSA information. Again, no entries in TurboTax for the FSA.

K

k3offlineAuthor

Thanks. I never double dipped (never expensed same expense on both FSA and HSA).

My understand so far was that we are not allowed to have both FSA and HSA. And if I do, my complete HSA would be considered as excess contribution would need to be withdrawn (which is taxable) to avoid any penalty.

Guess my understanding was wrong. Based on your response, there is no tax implication for having both FSA and HSA without double dipping.

I did receive 1099-SA. will add.

Thanks.

S

sls50211

@k3offline I need to clarify my FSA and HSA response. In order to have both an HSA and FSA coverage in a family unit, the FSA needs to be a specific purpose FSA. In other words the FSA can only be used for eligible vision or eligible dental expenses exclusively

For your HSA account, you can only be covered by a HDHP. Your spouse's FSA would be considered additional medical coverage other than the HDHP, as their FSA would be able to pay all family medical expenses.

That being said, assuming spouse's FSA coverage includes all family medical expenses, your 2020 HSA contributions would need withdrawn by the filing deadline of your return or pay a 6% excise tax on your 2020 excess contributions.

The excise tax applies to each tax year the excess contribution remains in the account. You may withdraw some or all of the excess contributions and avoid paying the excise tax on the amount withdrawn if you meet the following conditions.

You withdraw the excess contributions by the due date, including extensions, of your tax return for the year the contributions were made.
You withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw

The excise tax is reported on Form 5329.

Click here for more information from Publication 969 that discusses HSA, FSA, HRA

[Edited 3/15/21 3:40 PDT]