Correcting Excess HSA Contribution for 2017 past penalty deadline

Forum|Forum|7 years ago
March 10, 2019
1 reply
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While working on my 2018 taxes, I realized that I have an HSA excess contribution for Tax Year 2017. Since I am past the penalty deadline, how do I correct my mistake? I do not understand why Turbo Tax application did not alert me on this while I was filing my 2017 taxes. Suggestions would be appreciated. Thanks

Best answer by IsabellaG

If you had an excess HSA contribution for 2017, you should see an entry on line 59 of your 2017 1040, and Form 5329 which shows the 6% penalty as it was computed. You would have seen a screen that said "You may want to withdraw money from your HSA." and it would have shown the amount of the over-contribution.

If when you check your return you find that you really did have an over-contribution for 2017, and you haven't withdrawn it, you can use it as your 2018 contribution. The IRS lets you roll over the contribution to 2018, and deduct it on your 2018 tax return. So you would leave the money in the account and take the deduction. You can’t apply more than you have in excess and you can’t apply more than this year’s HSA contribution limit. If the over-contribution from 2017 plus your 2018 contributions exceed your annual limit, you'll have to withdraw this year's excess by the due date of your return, including extensions. See this article for more information.

IsabellaGAnswer

Employee

If you had an excess HSA contribution for 2017, you should see an entry on line 59 of your 2017 1040, and Form 5329 which shows the 6% penalty as it was computed. You would have seen a screen that said "You may want to withdraw money from your HSA." and it would have shown the amount of the over-contribution.

If when you check your return you find that you really did have an over-contribution for 2017, and you haven't withdrawn it, you can use it as your 2018 contribution. The IRS lets you roll over the contribution to 2018, and deduct it on your 2018 tax return. So you would leave the money in the account and take the deduction. You can’t apply more than you have in excess and you can’t apply more than this year’s HSA contribution limit. If the over-contribution from 2017 plus your 2018 contributions exceed your annual limit, you'll have to withdraw this year's excess by the due date of your return, including extensions. See this article for more information.

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G

GardenGirlAuthor

Employee

Thanks. The article link fails. Is the rollover that you refer to the same as the "Excess Contribution Correction Request Form" through the HSA custodial bank that lets me apply the excess funds to a different Tax Year? In my case the different Tax Year would be 2018. Thanks!