Tax Law (Questions About Taxes)/HSA over-contribution

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Question
I was self-employed for the first 9 most of 2012 and contributed the max $6,250 to my personally managed HSA.  I then took a full-time job in late Oct and selected a high deductible health insurance plan with an HSA feature.  I forgot about the fed max and started contributing to that plan, as did my employer match a little bit.  

After entering my W2 info and HSA info into Turbotax, it is telling me I have an excess contribution and need to take action to avoid some kind of penalty. The over-contribution is about $450.  What's the best remedy here? Got any suggestions?

Answer
Trey,

Thanks for your question.  There are only two remedies, leave the excess in or take it out.

You need to contact your plan administrator and inform them that you have made excess contributions.  If this is done by the due date of your return, it will not be an issue.  They will refund the excess contribution, along with any earning on that portion of your account balance.  The earnings paid to you will be taxable on your 2012 return.

If the excess is not withdrawn by the due date of the return, there is a penalty of 6% of the amount of the excess contribution.  This penalty is levied every year until the excess is withdrawn.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

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I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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