We all make mistakes. Fortunately, it's easy to correct and make corrections for your HSA. Just find your correction need below and follow the directions! Easy-peasy.
For incorrect contributions
If an HSA rollover is labeled as a New Contribution, it will be counted towards your annual HSA contribution limit. To avoid penalties for overfunding (contributing over your annual limit), update your transaction.
Select the New Contribution in question under Transactions.
Recategorize the transaction as a "Rollover (Limit 1 per tax year)."
Enter the amount you spent on unqualified expenses.
Enter the rest of the required details and submit.
Tax reporting note
After the correction is made, you'll see the updated information reflected on the final forms sent at the beginning of April. If nothing needs to be corrected, you can proceed with filing your taxes anytime.
For overfunding
If you overfunded your HSA (contributed more than your annual contribution limit), you should withdraw funds to avoid IRS tax penalties.
To make an overfunding correction:
Select Reimburse.
Select Health Savings Account.
Recategorize the reimbursement as a "Correction."
Enter the amount you overfunded by.
Enter the rest of the required details and submit.
This action will withdraw funds from your HSA, moving the funds to your chosen account and updating your total contributions for the year.
For refunds
If you receive a refund from a merchant or service provider, the refunded money will count towards your annual contribution limit. To remove it from your annual contribution total, recategorize the deposit as a "Reimbursement Correction."
Select the transaction listed under Transactions.
Recategorize the transaction as a "Reimbursement Correction."
Enter the amount you spent on unqualified expenses.
Enter the rest of the required details and submit.
For unqualified expenses
If you've spent funds on unqualified items or services, you may be audited and asked to redeposit the amount incorrectly spent. There are two steps.
Step 1: Deposit funds to reimburse the funds spent on unqualified items.
Select Deposit.
Recategorize the deposit as a "Reimbursement Correction."
Enter the amount you spent on unqualified expenses.
Enter the rest of the required details and submit.
Step 2: Recategorize the unqualified transaction.
Select the unqualified transaction listed under Transactions.
Recategorize the transaction as an "Unqualified Expense."
Enter the amount you spent on unqualified expenses.
Enter the rest of the required details and submit.