Question

We did not qualify for an HSA in 2019 however contributions continued into 2019 in error. Part is to be allocated to 2018 max.

Forum|Forum|6 years ago
June 16, 2019
1 reply
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Our health insurance was switched from a high deductible plan to standard plan for 2019 without our knowledge. In 2019, $705 HSA contributions had been made before we were able to stop the automatic deductions. $420 was withdrawn before 2018 tax returned is filed. After back and forth discussions, HSA manager said they would reallocate remaining $285 toward 2018 contributions which would max our 2018 HSA contribution limit. Do I declare this $285 on my 2018 tax return now as additional 2018 contributions pending or deal with it on my 2019 tax return when W-2 will show $705 contributed to HSA.

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D

dmertz

Employee

As I understand it, $705 was contributed through payroll deduction in 2019 and will be reported with code W in box 12 of your 2019 Form W-2. Also, the remaining total balance in the HSA is $285. With $285 treated as a contribution for 2018 and $420 treated as a contribution for 2019, for your 2018 tax return you'll need to indicate to 2018 TurboTax in the HSA section that your employer told you about other contributions and that $285 was contributed in 2019 for 2018. (If you've already filed your 2018 tax return you'll need to amend.) This will cause 2018 TurboTax to include the $285 on line 9 of your 2018 Form 8889.

Similarly, when preparing your 2019 tax return you'll need to indicate to 2019 TurboTax in the HSA section that your employer told you about other contributions and that $285 was contributed in 2019 for 2018. This will cause 2019 TurboTax to exclude the $285 on line 9 of your 2019 Form 8889. Since you will not be HSA eligible at any time in 2019 (unless you change coverage somehow), the $420 that remains on line 9 of your 2019 Form 8889 will be an excess contribution, but your penalty will be limited to the 6% of your 2019 year-end balance in the HSA (assuming that the year-end balance is less than $420).