Excess HSA contribution due to Medicare

Forum|Forum|2 years ago
March 22, 2024
2 replies
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My husband signed up for Medicare on June 1st of last year and we didn't realize that we could not contribute to an HSA. We maxed out our contributions for 2023 and the HSA Custodian told us we need to take a distribution in the amount of $5,000. However Turbo Tax is calculating a distribution of $10,500. The additional $5500 appears to be what my husband's employer contributed. When I asked the HSA Custodian about taking the additional amount out she claimed we can only take out the $5,000, yet according to Turbo Tax we are going to be taxed 6% if we don't take out the additional $5,500. Who is correct?

Best answer by Mike9241

@marthablock187771 could you have done something wrong in entering the contribution amounts. both your husband's contributions through his employer and his employer's contributions are included in box 13W on the W-2 so any entries on line 2 of the 8889/HSA would only be direct contributions by you or your husband to his HSA (did not go through the employer)

since he went on medicare on 6/1 he is only allowed a pro-rata contribution for 2023 which would be (7750family coverage)+ 1000 for him over 55) or 8750*5/12 =3646

so for there to be an extra 10500, the contributions by you, your husband and your employer would have to total 14146 (what amount is showing in box 2 of form 5498-SA for 2023 that you got from the custodian) In Turbotax for each month June through December you need to check that he had No (none) HDHP coverage. This is the way Turbotax handles the months covered by Medicare.

BillM223

TurboTax is. Your HSA custodian does not have enough information (like your tax return) to be able to correctly calculate your excess amount.

First, some questions.

1. How many HSAs do you have? Just 1 or 1 for each of you?

2.. If just 1 HSA, does your husband own it?

3. When you say, "However Turbo Tax is calculating a distribution of $10,500" you mean, "an excess of $10,500", right?

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marthablock187771Author

1. Just 1 HSA

2. Yes, my husband owns it.

3. Yes, excess contribution of $10,500.

BillM223

So you guys contributed $19,250 between the two of you?

The problem with your HSA custodian is that they don't have all the facts. If you two contributed $19,250, then you two certainly had an excess of $10,500 over your Family HSA limit of $8,750 ($7,750 plus $1,000 for him being 55+).

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Boomhauser

@marthablock187771Hi, did you have to file an amended 2023 tax return and did you receive any corrected 2023 1099 forms from your HSA custodian? Thanks,

marthablock187771Author

I did not have to file an amended return as the HSA custodian was able to remove the excess contribution and file before the April deadline.

Also, I did not receive a corrected 2023 1099 form from our HSA custodian. They just let me know the amount of the excess contributions which I entered into Turbo Tax.

Hope this helps.