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Help on Taxes--HSA Related

February 16th, 2018 at 04:18 pm

We are having an issue with our taxes in regards to our HSA. We maxed it out in the first half of the year and spent it in the first half of the year on medical costs. But then DH got a job with medical insurance after that that did not have an HSA. So now they are saying that we can only claim part of that based on the months we had our own self-payed insurance, not the fact that we used it all during the time we had one.

We can't just put the money back because the government counts that as putting in additional money, not returning it to the fund. We don't have the money, regardless, because we spent it on medical bills. The people at the credit union where we have our HSA have no idea what to do to fix it. They assume there should be some paperwork, but they don't know what is is and have never had this issue come up before.

We really can't afford to go see a tax professional as we are barely keeping our heads above water right now due to medical costs, so I was hoping one of you here that is one could tell us what form we need to fix this and possibly where it is located? DH is looking for info on the IRS Website, but you all know that that is like looking for a needle in a haystack, assuming you even have the right haystack to begin with.

4 Responses to “Help on Taxes--HSA Related”

  1. creditcardfree Says:

    Did you already receive a form? Which one? I haven't dealt with this...but I'm willing to look into it for you.

  2. Janelle Says:

    http://www.hsaedge.com/2016/11/06/how-to-remove-excess-contributions-to-an-hsa/

  3. MonkeyMama Says:

    You have two issues. One, you can only deduct partial year of HSA contributions on your tax return. It seems you figured that part out. The second issue is that you have to take the HSA money out or else you pay penalties/taxes on that sum indefinitely. This part is moot, because it's already been taken out.

    In a perfect world I'd have the HSA custodian reclassify the dollars that need to be taken back out. So instead of reporting it as a distribution (spent on medical expenses) it should really be subtracted from your 2017 contributions. That said, HSAs are relatively new and I don't know that I've ever had an HSA company actually issue this type of correction. I'd just keep records and wouldn't lose sleep over it. In contrast, IRAs and 401ks have been around forever and I'd probably demand they fix mistakes like this and correct their tax forms. & if you push enough they will. But in my experience HSA custodians are kind of like, "Not my problem" and I doubt they will be able to figure it out. You can ask though. It just doesn't really matter too much. For your tax records, I'd keep a copy of the account statements for the year, showing you didn't leave the money in there. Is all that really matters.

  4. LuckyRobin Says:

    Thanks. That information is helpful.

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