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02-05-2018 07:02 PM
Changed jobs this year....... until end of March had a HDHP with an HSA. Employer put in $2100 for the year for all HDHP part. in Jan. Well, they decided to shut the facility down in February and got another position with a PPO start of April.
So - for three months - limitations - can only have $1688 out of the $2100 - the other $412 is excess contributions. OK.......... put all that into the answers to the questions............ plus I said $1 for interest or whatever on the $412 since it was in there........ no where near that, but I'll put it. I also took a distribution of $1135 for 2017. That's fine, all in the forms
So I get the form to take the excess contribution out of my account.
Now......... EVERYWHERE I see - once I started reading up on how I had an excess contribution in the first place, is you have to put the excess contribution and interest in "Other Income" on line 21. The only number coming up in line 21 is the $1?!?!?...... where is the $412?? Shouldn't this be taxed? the program did not put this in the "other income". Or.......... is it free - which I can't fathom the IRS letting this go - since I took a distribution for med expenses in excess of this.
Someone help me out to figure this out
02-06-2018 07:54 AM
The excess contribution is supposed to appear on line 21 as you have stated. if you do not withdraw the excess by April due date of taxes, you also should see a 6% penalty on Form 5329, part VII. When you request the "excess contribution withdrawal" (a normal distribution will not resolve the excess amount) from the bank, they will determine the interest, if any, and show it on Form 1099-SA. If your withdrawal occurs in 2018, the interest income goes on your taxes next year
02-06-2018 09:50 AM
02-06-2018 09:59 AM - edited 02-06-2018 10:01 AM
I think this has been a bug in the software for at least a few years. If you search the forum for 'HSA excess' you can find several discussions where users have found this problem.
If you requested an excess contribution withdrawal, then your bank needs to issue a Form 1099-SA for the year the withdrawal was made. Otherwise, there is no entry of correction to the W2 amount. And yes, line 21 must include the withdrawn pretax amount as income. Form 5498-SA (issued in June) will show the net contribution no matter whether the withdrawal was 2017 or 2018. That's how the IRS will know your tax return net HSA contribution is correct.
I'm not sure of Block's policies. I don't use their product.
03-09-2018 05:51 PM
Did you indicate somewhere on the form that those were HSA contributions that you made post-tax? Did you enter them into the program yourself, or were they transferred from the info on your W-2 statement-- using a code that implied they were either employer contributions or contributions you made that were pre-tax? If you entered them as employee contributions separate from the info on the W-2, H&R Block's software is probably assuming they were post-tax contributions in which case the amount you took out would not be taxable since you would have already been counted in your income.