HSA

[jottaxlady]

Why would I get this notice letter after entering a person's HSA contribution

"The deductible contribution to your Health Savings Account for 2021 is $2,150. To ensure that your contribution is allowable, $2,150 must bedeposited to your account on or before April 18, 2022."

Could I be entering the info incorrectly? 

I took the figure from Box 2 of Form 5498-SA and entered it into Form 8889 2nd box under 'Contributions and Deductions'

[TaxGuyBill]

Was the contribution made through the employer (Code "W" in Box 12 of his W-2)?  If so, you don't enter it again as a contribution because the W-2 has already taken care of that.

[jottaxlady]

Oh thank you so much. It does say W on the W2. So I don't enter anything on form 8889? or I enter the amount under employer contribution?

[TaxGuyBill]

The amount should automatically flow to the employer contribution line.

The only thing you fill out is are the two spots saying they had a self-only or family HDHP.

The contribution line is only if the person makes contributions outside of the employer (that are not reported as Code "W" in Box 12 of the W-2).

[jottaxlady]

ok. It doesn't automatically flow into that line for some reason. I have it entered under the w2 form.

[TaxGuyBill]

I think it flows to one of the lines lower on the form/worksheet.  I don't have my program open at the moment, but it should show up somewhere on there.

[jottaxlady]

Ok I see it now and finally understand what is happening. I deeply appreciate you responding. Is there a class I can take to learn this program more or I can just keep posting my questions here for help?

[rbynaker]

Great info from TGB above.  I'll add that I would encourage them to make an additional HSA contribution by 4/15 and take the extra tax deduction.  If covered for all 12 months (or even covered under the "last month" rule) then $3,600 limit - $2,150 payroll contribution = $1,450 available contribution.  If they can spare the cash it doesn't get any better than triple-tax-free.

My recommendations in terms of ordering of savings:
1) Max out your employer match 401(k)
2) Max out your HSA contribution
3) Keep running the 401(k) up to the deferral limit

Rick

[jottaxlady]

Thanks much. I would recommend.