HSA & Turbotax in year Medicare is started

[Potstickers]

TurboTax tells me that we've over-contributed to our HSA's by $730 for tax year 2020. My math says I'm 99 cents under the contribution max. Any help figuring out where I'm going wrong (or where TT is) would be appreciated.

DH became eligible for Medicare in September and I followed in October. We had family HSA-compatible coverage January-August, and I had solo HSA-compatible coverage in September.

My calculation:
H contribution max = (8/12)*7100=4733.33 + (8/12)*1000 catch up = 666.66.

My contribution = (1/12)* 3550 (for the month I had single coverage)= 295.83 +(9/12) * 1000 catch up = 750.00

Total theoretically between all HSA accounts: 6445.82

Actual contributions were DH 1666 and mine of 4778.83 for a total of 6444.83.

TT says we over-contributed $730.

 

[RobbieB]

I had that problem too. You have to allocate yours and hers individually and it will go away.

 

[Potstickers]

I had that problem too. You have to allocate yours and hers individually and it will go away.

I've allocated contributions to each of us already.
I'm using the Mac download version, fwiw.

 

[cathy63]

If I enter your numbers as you gave them in your post, it works fine for me. However, I can reproduce your error if I have the coverage choices for each month offset by one; i.e. if I say that you each went on Medicare a month earlier than you did. So double check that you have selected the correct choice of Self Only / Family Plan / Medicare coverage for each month for each person.

Also, did you have a Family HDHP plan for all of 2019? If you made an HSA contribution in that year and only had an HDHP plan for part of the year, then you may have to include some of 2019's contribution in the 2020 calcs. You could try selecting "None" when it asks what type of HDHP you each had on Dec 1 2019, which will bypass that calculation. If doing that changes the overfunding message then it may help to pinpoint the issue.

 

[Potstickers]

If I enter your numbers as you gave them in your post, it works fine for me. However, I can reproduce your error if I have the coverage choices for each month offset by one; i.e. if I say that you each went on Medicare a month earlier than you did. So double check that you have selected the correct choice of Self Only / Family Plan / Medicare coverage for each month for each person.

Also, did you have a Family HDHP plan for all of 2019? If you made an HSA contribution in that year and only had an HDHP plan for part of the year, then you may have to include some of 2019's contribution in the 2020 calcs. You could try selecting "None" when it asks what type of HDHP you each had on Dec 1 2019, which will bypass that calculation. If doing that changes the overfunding message then it may help to pinpoint the issue.

I've double (and triple checked) - my husband is listed as having family coverage January-August, then Medicare/None for September-December, and I'm listed as having family coverage January-August, then Self-Only coverage for September, and Medicare/None for October-December.

We did have a HDHP for all of 2019.

And hmmm.... I overcontributed to my 2019 HDHP by $735.88, which I took out before filing my 2019 taxes. Fidelity actually "converted" it to a 2020 contribution, though I have to report $5 in earnings on that. I have been including the $735.88 as part of my 2020 contribution. Maybe I'm supposed to exclude it when answering TT's question of how much I contributed to my HSA in 2020?

 

[cathy63]

Since Fidelity converted the excess contribution from 2019 into a 2020 contribution before you filed last year, then you would not have reported this overcontribution on form 5329 in your 2019 return. If you do see form 5329 in your 2019 return, and you transferred your data from last year into your 2020 return, then that could be the source of the problem.

Did Fidelity give you a 1099-SA showing the $740 withdrawal in box 1 and the $5 earnings in box 2 and code 2 in box 3? That could also be causing the issue because when you enter those numbers, you'd be telling TTax that you withdrew the excess funds and you owe tax on them. I don't think the $735 should be on this form if they converted it to a 2020 contribution though.

Assuming there's no 5329 in your 2019 return, and you don't have a 1099-SA showing a $735 excess contribution withdrawal, then you do have to include the $735 as part of your 2020 contributions. You should also answer the question "Did you overfund your HSA in 2019?" as "No". And when it asks how much you contribued to your HSA in 2019, you should leave the Excess Contributions box blank.