Sage-Tips

How do I correct an excess HSA contribution?

You can correct excess contributions by removing the excess amount (and any earnings attributable to the excess contributions) before you file your personal income tax return for that tax year. By doing so, you do not include the amount of the excess contribution in your taxable income and you face no additional tax.

Can you change pre-tax HSA contributions?

You can change the amount you contribute to your HSA at any time during the plan year. If you are changing the amount contributed via payroll on a pre-tax basis, check with your employer. You can also make non-payroll contributions changes using the Contribution Center in your online account.

Can an employer prorate HSA contributions?

Proration means that the employee contributes to the HSA just for the months that he or she is eligible. To prorate, the employee would calculate the contributions on a monthly basis. How much he or she can contribute for each month is based on having the HDHP on the first day of the month.

Why does TurboTax say I over contributed to my HSA?

The main reason you might get an ‘overcontributed’ error for your HSA is that TurboTax picked up your HSA contributions from your W-2, and you also entered them again in the HSA section. If this is not the case, make sure you indicated ‘Family Plan’ for your HDHP coverage.

How do I apply for excess HSA contributions to a future year?

Option #1: The best way to handle an excess contribution is to withdraw it from your account and include it as taxable income for that year. You must do this by the due date (including extensions) of that year’s tax return.

Are excess contributions subject to 10 penalty?

If you remove your excess contribution plus earnings before either the April 15 or October 15 deadline, the earnings are taxed as ordinary income. And if you’re under 59½, you’ll be subject to a 10\% early withdrawal penalty.

How do I change my HSA contributions to health equity?

In the ‘My Account’ tab of the HealthEquity member portal, select ‘Make Contribution’ from the ‘HSA’ menu. From this page you can make changes to recurring contributions or cancel the contribution by clicking ‘Stop/End.

Can an employer change their HSA contribution at any time?

Employees contributing to an HSA through a cafeteria plan may make adjustments to their contributions at any time, as long as the change only affects future contributions.

How long can an employer hold HSA contributions?

90 days
Compliance Team Response: The rule of thumb is that prompt depositing means as of the earliest date in which the contributions can be reasonably segregated from the employer’s general assets, and in no event later than 90 days after the payroll deduction is made.

How do I remove my HSA from TurboTax?

How do I remove an amount for HSA account?

1. Log into your account; click Take Me to My Return if necessary.
2. Click on My Account at the top of the screen.
3. Then click on Tools and select Delete a Form.
4. Scroll through the list of forms and when you find the HSA form (usually form 8889), click Delete next to it.

What is the HSA contribution limit for 2021?

$3,600
2021 HSA contribution limits have been announced An individual with coverage under a qualifying high-deductible health plan (deductible not less than $1,400) can contribute up to $3,600 — up $50 from 2020 — for the year to their HSA. The maximum out-of-pocket has been capped at $7,000.