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Over Contribution to HSA, Going for Simplest Recovery
Old 02-17-2015, 09:21 PM   #1
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Over Contribution to HSA, Going for Simplest Recovery

Long story*, but I ended up with $8,200 added to my HSA this year. The tax software just added a little tax at the end of the 1040...$39 or something. I'm being lazy and just asking here first, in case someone already encountered this.

Is the best (only) thing to do is just pay that little extra tax? Will it be over and done with, or will that haunt me later. By that I mean will I ever have to think of it again, ever? Seens like it would haunt me. So is there a way to just take it out, or is it too late?

I funded my HSA with $7,500. I figured I was $50 under the 55+ limit.

But megacorp roped everyone out of one plan type, and for 2014 we had a new (crummy) plan, so they threw us a bone: gave us a few bucks to spend on healthcare. Mine was $700. I mailed a few receipts and the $700 was gone.

But now I see that the $700 counts as part of my HSA contributions. At least the tax software put it in there.

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Old 02-17-2015, 09:48 PM   #2
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You got hit with a 6% tax for the overpayment. You can underpay by the $650 overpayment next year and it will be all over, otherwise you're going to get hit with another 6% until you no longer have overpaid. Or you can ask your HSA administrator to back out $650 (plus whatever that money made in your HSA account) and you won't have to pay the $39 tax.

Over funded HSA is a past thread on this. I overpaid one year and remember it being this way too.

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Old 02-18-2015, 05:50 AM   #3
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This happened to me once. Unanticipated employer contribution in DW's HSA put us over the annual limit. The rule is: no harm no foul as long as you withdraw the excess contribution amount plus any associated earnings before you file your tax return for that year. So you have until April 15th to fix with no tax penalty. Your HSA provider should have a specific form for this. Taking a normal distribution for medical expenses is not the same as withdrawing an excess contribution.
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Old 02-18-2015, 07:54 AM   #4
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I overpaid because I stopped working mid-year. I just had the overpayment reimbursed to me. I think if you leave it in, you have to change your tax return for 2 years in a row: The first year to show that you pay the 6% excise tax and the 2nd year to show that you underfunded that year by the amount you overfunded the previous year and now have everything legit.
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Old 02-18-2015, 08:14 AM   #5
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Old 02-19-2015, 07:44 AM   #6
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Update: I found the PDF form on the HSA adminastrator's site, filled it out, and faxed it (faxzero is handy at times). They said I could email an image or PDF, but it had my ssn on it, so faxing seemed more secure. Anyway, well on the course of untangling the mess, and no extra tax on my 2014 1040.

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