If you`ve contributed too much to your HSA, what do you do? Well, you have a few options. First, you can withdraw excess contributions before tax day and avoid additional penalties and red tape. It is important to note that simply spending excess contributions on eligible medical expenses is not considered a withdrawal (this is a distribution). To withdraw your contributions, contact your HSA administrator. If you do your taxes with paper and pencil, it`s still pretty easy to figure out what`s going on line 25. You are using Form 8889 (instructions here). Part I is where you report contributions to your HSA, and Part II is where you report distributions (payments). First of all, fill in the section above where you will be asked for your personal data. Next, let`s move on to Part VII, which deals specifically with HSAs. Here you enter the following information (and do the math a bit): Your second option, if you have contributed too much, is to leave the money in your HSA account and fill out tax form 5329 with your income tax form 1040, 1040-SR or 1040-NR. If you do not need to file a tax return for 2019, you will need to file Form 5329 yourself and you will not be able to do so electronically.

If you file a Form 5329 for contributions from a previous year, you will need to use the version of the form for that year. If you have decided to keep your excess contributions in your account, you can find tax form 5329 on the IRS website. This form is used to report any additional taxes due on the following tax-advantaged accounts: HSA, MSA Archer, ESA covered, QTP, amended endowment contracts, IRA and other eligible pension plans. Because this form covers so many different accounts, you should ignore the many boxes that do not apply to your situation. Detailed instructions on how to complete Form 5329 can be found on the IRS website. Navigating the maze of tax forms each year can seem daunting, especially if you do it alone. But we`ve put together a comprehensive guide to help you properly archive the right forms. As always, if you have a question we don`t answer, a particular circumstance, or if you simply don`t feel comfortable filing your own tax returns, contact a tax professional who can help. Now that you`ve collected the necessary tax forms, it`s time to submit them! Contributions to HSA are reported on line 25 of Form 1040. If you use tax software, it will ask you a few questions and use your answers to calculate the number that goes to line 25. IRS Form 5329 can help calculate the tax payable for excess contributions.

“Distributing excess forms” does not change your contribution limits. For more information, contact a tax professional. Looking for more information on how to fill out your taxes for 2019 if you have an HSA? Check out Lively`s 2019 HSA Tax Guide. If you have contributed too much to your HSA, you will need to complete tax form 5329 before the tax date. There are several ways to avoid having to fill out this form – and we`ll discuss them here. There`s no “one size fits all” when it comes to preparing taxes, but contributing to a health savings account (HSA) won`t add much complexity to your tax situation. Finding the right forms is the best place to start. The three forms above track your activity for the year. Once you have them on hand, it`s easy for you (or your tax software!) to complete these two elements: HSA contributions you`ve made directly to your HSA (outside of your employer`s payroll system) are reported on line 2.

If HSA contributions were deducted from your paycheque and/or your employer contributed on your behalf, these contributions must be listed on line 9. Note that a single transfer from IRA to HSA can be reported on line 10. One of the advantages of an HSA is that there are several ways to build up your savings. You can contribute from your paycheck, your employer can contribute to your account, as can your spouse, parents and any other loved one. You can also transfer money from another HSA and make a one-time transfer from an IRA. Another good rule of thumb is that you can contribute to your HSA until tax day, April 15, 2020, and that these contributions are accounted for in your 2019 income taxes. Always contact a professional tax advisor if you have any questions about your specific situation. Because HSAs offer three different tax benefits, the IRS strives to stay informed of all the actions you take. But don`t let the fear of complicated taxes stop you from enjoying the many benefits they offer. The amount you withdrew from your HSA goes to line 14, and the portion of withdrawals you used for eligible health expenses goes to line 15.

Make sure you have receipts to document all the invoices you paid with HSA funds – you`ll need them if you ever get audited. For pre-tax contributions paid through employee contributions:. It`s important to note that if you have an HDHP that covers you and your family is covered by another medicare plan, you`re still bound by individual contribution limits. However, you can use your HSA money to pay for all of your family`s eligible medical expenses. That`s all there is to it! Form 8889 only takes a few minutes to fill out by hand, and the tax software will do it for you after answering a few basic questions. If you have the correction documentation, follow the rules for maximum contribution amounts, and only withdraw funds to pay for eligible medical expenses, your HSA tax return won`t be too difficult. Wrong HSA contribution refund: Complete online Yes, you owe a 6% tax penalty for the contribution that is too high. You will also have to pay additional income taxes on these excess contributions. If you decide not to pay this additional penalty or income tax, the IRS will charge you 6% for each year since the overpayment of contributions. It is best to manage the situation as quickly as possible to avoid having to pay even more fines. Distribution of the HSA Excess Contribution Form: Fill out online If you withdrew money from your HSA for anything other than eligible health care expenses, you will have to pay income tax on that money. If you are under the age of 65, you will likely have to pay an additional 20% tax, which is calculated on line 17 of Form 8889.

As long as all HSA distributions have been used for eligible expenses, you will have zeros in taxable distributions and additional tax lines. If you contribute more to your Health Savings Account (HSA) than the IRS limit for the tax year, this is called an excess contribution. All excess contributions are subject to income tax and excise duty of 6% per year until they are corrected. Although your HSA`s funding sources are reported on different lines, the total amount must not exceed the maximum contribution limit for the year. In 2019, the cap was $3,500 for an individual and $7,000 for a family. If you are 55 years of age or older, the limit is $1,000 higher and this adjustment is made on line 3. However, there are limits to the amount you can contribute in a given year, and in 2019, those limits were as follows: $3,500 for an individual and $7,000 for a family. In 2020, these limits increased to $3,550 for individuals and $7,100 for families.

If you turned 55 on December 31, 2019, you can contribute an additional $1,000 for the 2019 and 2020 tax years. Part II of Form 8889 only applies if you deducted money from your HSA during the year to pay for medical expenses (including withdrawal of excess contributions if necessary). If you don`t have distributions and let your HSA money grow, Part II could all be zeros. .