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February 17, 2022
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I am enrolled in HDHP. Employer HSA contributions are $625. Why is that being counted as income, and why do I have a $38 penalty for excess contributions?

  • February 17, 2022
  • 1 reply
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I did not contribute out of pocket. Turbo Tax is telling me the $625 is taxable income and the $38 is for excess contributions. Is there anyone that can help me understand this?
Best answer by BillM223

From your description, it sounds like you did not complete the HSA interview. In this interview, you describe the type of HDHP coverage you had and for how many months. From this information, TurboTax would have calculated your annual HSA contribution limit ($3,600 for 12 months of Self-only coverage or $7,200 for 12 months of Family coverage).

 

Since TurboTax has put the entire contribution of 625 as Other Income (line 8 on Schedule 1 (1040)), you almost certainly have a calculated annual HSA contribution limit of $0 (zero), which would happen if you failed to complete the HSA interview.

 

The $38 penalty comes from form 5329 because the 625 was considered as excess contribution on which you pay a 6% penalty if you don't withdraw the excess before April 18th.

 

No matter, both the line 8 Other Income and the $38 penalty will go away once you return to the HSA interview and complete it.

1 reply

BillM223Answer
February 17, 2022

From your description, it sounds like you did not complete the HSA interview. In this interview, you describe the type of HDHP coverage you had and for how many months. From this information, TurboTax would have calculated your annual HSA contribution limit ($3,600 for 12 months of Self-only coverage or $7,200 for 12 months of Family coverage).

 

Since TurboTax has put the entire contribution of 625 as Other Income (line 8 on Schedule 1 (1040)), you almost certainly have a calculated annual HSA contribution limit of $0 (zero), which would happen if you failed to complete the HSA interview.

 

The $38 penalty comes from form 5329 because the 625 was considered as excess contribution on which you pay a 6% penalty if you don't withdraw the excess before April 18th.

 

No matter, both the line 8 Other Income and the $38 penalty will go away once you return to the HSA interview and complete it.

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