The information provided in these articles is intended for informational purposes only. It is not to be construed as the opinion of Central Bancompany, Inc., and/or its subsidiaries and does not imply endorsem*nt or support of any of the mentioned information, products, services, or providers. All information presented is without any representation, guaranty, or warranty regarding the accuracy, relevance, or completeness of the information.
This icon indicates a link to third-party content. By clicking on the link, you will leave our website and enter a site not owned by the bank. The site you will enter may be less secure and may have a privacy statement that differs from the bank. The products and services offered on this third-party website are not provided or guaranteed by the bank.
FAQs
Why is TurboTax saying I have an excess HSA contribution? ›
Is TurboTax wrong? Unless you made additional contributions, the only amount that needs to be entered into TurboTax for the HSA contributions is the amount already on your W2 with code W. Do not enter the amount again.
What can I do if I have excess HSA contributions? ›Withdraw your excess health savings account contribution
But don't wait too close to the tax deadline; you will need to contact your plan provider to withdraw the funds, which may involve some paperwork, and the removal may not happen immediately.
To correct excess contributions, you must remove the excess amount and any earnings attributable to it from your HSA by the tax filing deadline, including any extensions.
How to withdraw excess HSA contribution fidelity? ›Go to Fidelity.com or call 800-544-3716. Use this form to request a return of an excess contribution made to your Fidelity HSA®. If you are a nonresident alien, please contact Fidelity prior to completing this form, as you may be subject to additional tax-withholding requirements.
Can excess HSA contributions be removed without penalty IRS? ›The excess amount will be removed from your account and refunded to you. You will need to claim the excess contributions on your Federal Income Tax return and pay income taxes on those contributions. However, you would avoid having to pay the 6% excise tax penalty.
What is the penalty for excess contributions on TurboTax? ›If you do not have the Form 5329 include on your 2022 tax return then you didn't not have a 6% penalty calculated and are good. Generally, if you did not remove the excess contribution plus earnings by the due date then you would have to pay the 6% penalty for each year the excess remained in he account.
What happens if you contribute extra to HSA? ›Tax on excess FHSA amounts
Generally, you have to pay a tax of 1% per month on the highest excess FHSA amount in that month. You will continue to pay the monthly 1% tax until the excess FHSA amount is eliminated.
However, you can remove the excess contributions by submitting an Excess Contribution Removal Form to us within that tax year. (A fee may apply. See your HSA Bank Fee and Interest Rate Schedule.)
Why is TurboTax telling me to withdraw from my HSA? ›Also, distributions from an HSA that are used to pay qualified medical expenses aren't taxed. However, if you overfunded or weren't eligible to contribute to your HSA in 2023, you'll need to withdraw the excess amount by April 15, 2024 to avoid a penalty (October 15 if you filed an extension).
What happens to leftover HSA money? ›Unlike many other health plans, the balance in your HSA account carries over indefinitely. This means that any extra money you have at the end of the year does not disappear or reset. Instead, it remains in your account and continues to grow over time.
What happens if you don't have enough money in your HSA? ›
If you do not have enough money in your HSA to pay for an eligible medical expense you will need to pay for the expense by some other means. Once the money is in your HSA account, you can withdraw the amount that you paid and reimburse yourself.
What is the average HSA account balance? ›The average HSA balance rose to $4,418 at the end of 2022 from $2,711 at the start of the year, the most recent data available in EBRI's database, given that participants can still contribute to 2023 HSAs until taxes are due in April.
How do I withdraw excess contributions? ›- Remove the excess within 6 months and file an amended return by October 15—if eligible, the excess plus your earnings can be removed by this date.
- Remove the excess once discovered, even after October 15. You'll need to reduce next year's contributions by the amount of the excess.
Excess contributions are taxed at 6% per year for each year the excess amounts remain in the IRA. The tax can't be more than 6% of the combined value of all your IRAs as of the end of the tax year.
Do I have to report HSA contributions on my tax return? ›You must report contributions from your HSA on IRS Form 8889. Get 5498-SA information in the "If I don't have a 5498-SA, how can I get my contributions by tax year?" question below. Find a sample of form 5498-SA from the IRS.
Why is my HSA being taxed by TurboTax? ›If you spend your HSA on non-medical expenses, the money will be taxed and you'll receive a 20% penalty if you're not disabled or under the age of 65. There's also an annual limit to how much money you and your employer can add to your HSA.
How do I remove my HSA from TurboTax? ›- Log into your account; click Take Me to My Return if necessary.
- Click on My Account at the top of the screen.
- Then click on Tools and select Delete a Form.
- Scroll through the list of forms and when you find the HSA form (usually form 8889), click Delete next to it.
If you exceed the contribution limit, you must withdraw the excess before you file your tax return or you'll be penalized. It's a good idea to double-check the HSA information you entered in TurboTax to make sure you really had an excess contribution.
Why do I owe more taxes with HSA? ›Make appropriate distributions. If you use your HSA money to pay for anything other than a qualified medical expense, and you're under the age of 65, you'll have to add the amount you used to your taxable income on your tax return. Then you'll have to pay an additional 20 percent tax penalty on that amount.