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How and when to report earnings on 2018 excess contribution to HSA

Forum|Forum|6 years ago
October 8, 2019
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I am now preparing an amended tax return using my 2018 Turbotax Download, because I inadvertently made excess HSA contributions for 2018 (due to signing up for Medicare in 5/2019, which became retroactive through November 2018. ) I notified my HSA bank and they sent me a Distribution check which included my excess contribution of $1234.00 plus $72.53 earnings that had accumulated on the excess contribution. I filled out a 1040X Amended Tax Return in my 2018 Turbotax download, but it never asked me for the amount of earnings on the distribution. So when I printed out the Amended return, it only shows the $1234 as "other income". How do I report the $72.53 in earnings? Should I just manually change the $1234 on the 2018 amended return to $1306.53, or do I report the 2018 earnings separately some other way. I'm confused because I received the distribution check in 2019 even though it relates to 2018, so I don't know if this will affect my 2019 return as well I called the IRS and could not get a human to answer the question. I could not find the answer on IRS.gov. I called my HSA bank and they did not know the answer either. Please help.

Best answer by dmertz

The earnings get reported on your 2019 tax return. Only the $1,234 gets included on your 2018 amendment. In 2019 TurboTax you'll enter the 2019 Form 1099-SA and 2019 TurboTax will include the earnings as miscellaneous income.

Kat11_2

Employee

I've just read the section on Excess Contribution for HSA in IRS Publication 969. I'll link that publication below.

https://www.irs.gov/publications/p969

From what I understand, you must have withdrawn the excess contribution prior to your 2018 filing due date, including extension, in order to avoid the penalty. I'm not understanding that as the case in your situation.

Since the bank has issued your check in the amount of the overpayment, with interest, I'd think the best idea is to simply wait until filing for 2019 to address the overpayment (rather than amending 2018). Your bank will issue you a 2019 tax document in the amount they sent to you. You'll see how to enter than tax document when you're preparing your 2019 return. I don't think there's any way to avoid the penalty at this point.

See the screenshots I'm attaching (from Publication 969) that support my thoughts. If you have a different interpretation, please share it with me.

If you DO decide to cancel or "undo" your amended return, the TurboTax FAQ linked below will instruct you on how to do that.

https://ttlc.intuit.com/community/amending/help/how-do-i-cancel-or-undo-an-amended-return-in-the-turbotax-cd-download-software/01/26316

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*** I am NOT a tax expert. I am a seasoned TurboTax user, and volunteer to provide assistance to TT users. Nothing I post is to be considered TAX ADVICE; I bear no legal liability for responses.***

D

dmertzAnswer

Employee

The earnings get reported on your 2019 tax return. Only the $1,234 gets included on your 2018 amendment. In 2019 TurboTax you'll enter the 2019 Form 1099-SA and 2019 TurboTax will include the earnings as miscellaneous income.