Health Care

Health Care

How do health care reform and taxes connect? The Affordable Care Act is single largest change to the tax code in two decades. Find help navigating the complexities of the new health care legislation, Medicare, Medicaid and other medical deductions.

Reply
Pioneer
Posts: 2
Registered: ‎04-09-2017

HSA Mess - Please help

In 2015, both my husband and I had HSA accounts and an HDHP family plan. When I contributed after-tax dollars to my HSA, I forgot to account for his employer contributions to his and the TurboTax program I used showed the excess in his HSA account, not mine. I closed my HSA in November of 2015, so his account was the only one with a balance. We paid a 6% penalty of $36.

 

In 2016, my husband had an HSA account and I did not. We were in the same HDHP. I turned 55 in October 2016. His company contributed $600 and we contributed after tax $6225.00, for a total of $6825.00. We used $6225.00 for medical expenses and the balance at the end of 2016 was $1,190.

 

After 2017 medical expenses, he has $545.04 in that account.

 

Thinking we have an excess for 2016 of $75 ($6825 - $6750 max), we requested correction of $75. H&R Deluxe is showing we have $600 excess. I didn't realize it rolled over from 2015. What should I do? I do have an HSA account of my own this year. Can the excess be rolled over his to mine?

Valued Neighbor
Posts: 76
Registered: ‎02-28-2016

Re: HSA Mess - Please help

"In 2015, both my husband and I had HSA accounts and an HDHP family plan. When I contributed after-tax dollars to my HSA, I forgot to account for his employer contributions to his and the TurboTax program I used showed the excess in his HSA account, not mine. I closed my HSA in November of 2015, so his account was the only one with a balance. We paid a 6% penalty of $36."

That would be $600 excess. According to the IRS rules, the HSA limit of $6650 (2015) can be divided any way you choose. So that either/or both HSA(s) could be assigned the excess. I believe the software program you used was limited and put the excess on the second person named in a joint tax file by default. I think they addressed that problem for 2016.

"In 2016, my husband had an HSA account and I did not. We were in the same HDHP. I turned 55 in October 2016. His company contributed $600 and we contributed after tax $6225.00, for a total of $6825.00. We used $6225.00 for medical expenses and the balance at the end of 2016 was $1,190. After 2017 medical expenses, he has $545.04 in that account."

I assume your husband was not age 55 in 2016. You HSA limit would be $6750 shared between his HSA and your HSA. You could add $1000 to your HSA (age 55+).


"Thinking we have an excess for 2016 of $75 ($6825 - $6750 max), we requested correction of $75. H&R Deluxe is showing we have $600 excess. I didn't realize it rolled over from 2015. What should I do? I do have an HSA account of my own this year. Can the excess be rolled over his to mine?"

No, it can't be transferred to your HSA. Your choice (forced by software) to report the excess in your husband's HSA in 2015 requires it to remain his excess. You could request another $600 excess withdrawal before 4/18/17 to save paying additional penalty.

Pioneer
Posts: 2
Registered: ‎04-09-2017

Re: HSA Mess - Please help

Thank you, BluesDog. I looked through as much of the IRS documentation as I could find and don't see where an excess from one year rolls to the next. A friend is telling me that because I paid a penalty on the excess once, I shouldn't have to pay it again. Can you point me to the IRS info about this? When I called IRS, I got a recording that the issue isn't supported. 

Highlighted
Valued Neighbor
Posts: 76
Registered: ‎02-28-2016

Re: HSA Mess - Please help

[ Edited ]

Sure. Refer to IRS Publication 969, page 7, Excess Contributions, second paragraph.

https://www.irs.gov/pub/irs-pdf/p969.pdf

"Generally, you must pay a 6% excise tax on excess contributions. See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. The excise tax applies to each tax year the excess contribution remains in the account."