Discussion:HSA excess contributions, right?
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| Revision as of 03:49, 14 June 2009 Riley2 (Talk | contribs) ← Previous diff |
Revision as of 14:59, 15 June 2009 LJACPA (Talk | contribs) (Thanks Riley. P) Next diff → |
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| {{ForumReplyPost|UserID=Riley2|Date=14 June 2009|Text=Sounds like it is too late to correct 2007. Appears that he will need to pay the excise tax on excess contributions for 2007 as well as recognizing income for the corrective distribution taken in 2009.}} | {{ForumReplyPost|UserID=Riley2|Date=14 June 2009|Text=Sounds like it is too late to correct 2007. Appears that he will need to pay the excise tax on excess contributions for 2007 as well as recognizing income for the corrective distribution taken in 2009.}} | ||
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| + | {{ForumReplyPost|UserID=LJACPA|Date=15 June 2009|Text=Thanks Riley. Please let me clarify this. I know we have until the extended due date of the 2008 return to take out the excess contribution for 2008 and would have to pay tax on the earnings (if any) in 2008. I had not thought too much about the distributions, but clearly with distributions of at least part of the excess contributions, that's an additional problem. So, we probably don't have excess contributions for either year because at least most if not all of those contributions were distributed as payments of qualified medical expenses. I guess it's really going to be taxable distributions vs. excess contributions for both years. Does that sound right? Maybe I shouldn't be surprised about this and maybe it's not the HSA trustee's responsibility, but why wouldn't they question such large contributions? Thanks.}} | ||
Revision as of 14:59, 15 June 2009
Discussion Forum Index --> Advanced Tax Questions --> HSA excess contributions, right?
Discussion Forum Index --> Tax Questions --> HSA excess contributions, right?
| 13 June 2009 | |
| A new client this year provided 2007 tax return that shows contributions to his individual HSA for 2007 of $8,000 (he's under 55 for both 07 and 08). The deduction allowed on 1040 was correct on page 1 at $2,850. I didn't think much about it until I got the 5498 for 2008 showing contributions of over $11,000. I input this in tax software and got no error or diagnostic message and went back to read/research this. Wouldn't both years be considered to have excess contributions that would need to be withdrawn and tax paid on the earnings? I have to be missing something here. This individual was diagnosed with terminal cancer and is considered totally disabled. Would that matter? I've read the Pub 969, instructions to 8889 and all discussions here and on and would appreciate someone's feedback on what I am not seeing right. Thanks. | |
| 14 June 2009 | |
| Sounds like it is too late to correct 2007. Appears that he will need to pay the excise tax on excess contributions for 2007 as well as recognizing income for the corrective distribution taken in 2009. | |
| 15 June 2009 | |
| Thanks Riley. Please let me clarify this. I know we have until the extended due date of the 2008 return to take out the excess contribution for 2008 and would have to pay tax on the earnings (if any) in 2008. I had not thought too much about the distributions, but clearly with distributions of at least part of the excess contributions, that's an additional problem. So, we probably don't have excess contributions for either year because at least most if not all of those contributions were distributed as payments of qualified medical expenses. I guess it's really going to be taxable distributions vs. excess contributions for both years. Does that sound right? Maybe I shouldn't be surprised about this and maybe it's not the HSA trustee's responsibility, but why wouldn't they question such large contributions? Thanks. | |
