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Line 13

 

If you or someone on your behalf (or your employer) contributed more to your HSA than is allowable, you may have to pay an additional tax on the excess contributions. Figure the excess contributions using the following instructions. See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the additional tax.

 

Excess Contributions You Make

 

To figure your excess contributions (including those made on your behalf), subtract your deductible contributions (line 13) from your actual contributions (line 2). However, you can withdraw some or all of your excess contributions for 2013 and they will be treated as if they had not been contributed if:

 

• You make the withdrawal by the due date, including extensions, of your 2013 tax return (but see the Note under Excess Employer Contributions, later),

 
• You do not claim a deduction for the amount of the withdrawn contributions, and

 
• You also withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings.

 

Excess Employer Contributions

 

Excess employer contributions are the excess, if any, of your employer's contributions over your limitation on line 8. If you made a qualified HSA funding distribution (line 10) during the tax year, reduce your limitation (line 8) by that distribution before you determine whether you have excess employer contributions. If the excess was not included in income on Form W-2, you must report it as “Other income” on your tax return. However, you can withdraw some or all of the excess employer contributions for 2013 and they will be treated as if they had not been contributed if:

 

• You make the withdrawal by the due date, including extensions, of your 2013 tax return (but see the following Note),

 
• You do not claim an exclusion from income for the amount of the withdrawn contributions, and

 
• You also withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings.

Line 13

If you or someone on your behalf (or your employer) contributed more to your HSA than is allowable, you may have to pay an additional tax on the excess contributions. Figure the excess contributions using the following instructions. See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the additional tax.

Excess Contributions You Make

To figure your excess contributions (including those made on your behalf), subtract your deductible contributions (line 13) from your actual contributions (line 2). However, you can withdraw some or all of your excess contributions for 2013 and they will be treated as if they had not been contributed if:

• You make the withdrawal by the due date, including extensions, of your 2013 tax return (but see the Note under Excess Employer Contributions, later),

• You do not claim a deduction for the amount of the withdrawn contributions, and

• You also withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings.

Excess Employer Contributions

Excess employer contributions are the excess, if any, of your employer's contributions over your limitation on line 8. If you made a qualified HSA funding distribution (line 10) during the tax year, reduce your limitation (line 8) by that distribution before you determine whether you have excess employer contributions. If the excess was not included in income on Form W-2, you must report it as “Other income” on your tax return. However, you can withdraw some or all of the excess employer contributions for 2013 and they will be treated as if they had not been contributed if:

• You make the withdrawal by the due date, including extensions, of your 2013 tax return (but see the following Note),

• You do not claim an exclusion from income for the amount of the withdrawn contributions, and

• You also withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings.

The 2014 HSA contribution limit for you and your husband together is $6550. This limit applies to both of you together, whether you file jointly or separately. So it looks like you and your husband have excess contributions this year. You'll need to withdraw some contributions, either in your account or your husbands account, to get under $6550 total for the year.

Since your husband funds his own HSA and doesn't have any employer contributions to it, you might find it easier to withdraw the excess contributions from his HSA instead of yours. To do this, you need to tell his HSA bank that the withdrawal is an excess contribution withdrawal, so that it gets reported correctly on his 1099-SA. There won't be any changes to his W-2, and the only "other income" he'll need to report is any earnings on the excess contributions from his 1099-SA.

The 2014 HSA contribution limit for you and your husband together is $6550. This limit applies to both of you together, whether you file jointly or separately. So it looks like you and your husband have excess contributions this year. You'll need to withdraw some contributions, either in your account or your husband's account, to get under $6550 total for the year.

Since your husband funds his own HSA and doesn't have any employer contributions to it, you might find it easier to withdraw the excess contributions from his HSA instead of yours. To do this, you need to tell his HSA bank that the withdrawal is an excess contribution withdrawal so that it gets reported correctly on his 1099-SA. There won't be any changes to his W-2, and the only "other income" he'll need to report is any earnings on the excess contributions from his 1099-SA.

Since you have already spent this money out of your HSA, you won't actually receive a check from the withdrawal. Instead, the money that you have already spent will be recategorized from a normal HSA medical distribution to an excess contribution withdrawal. When you get your 1099-SA form from your HSA bank at tax time, the distributions will be coded as excess contributions distributions. In addition, the form will include the amount of any earnings (interest) that you received on your excess contributions.

At tax time, you'll need to examine your W-2 form from your employer closely. If the form does not include the amount that the employer HSA contribution in your taxable income, you'll need to add this amount as "Other income" on your taxes. You'll also need to include any earnings on the excess contributions reported on the 1099-SA.

The instructions for Form 8889, line 13 explain what to do in your situation (note: The text here is from the 2013 version of the instructions):

Excess Employer Contributions

If you choose to take this money out of your account, since you have already spent this money out of your HSA, you won't actually receive a check from the withdrawal. Instead, the money that you have already spent will be recategorized from a normal HSA medical distribution to an excess contribution withdrawal. When you get your 1099-SA form from your HSA bank at tax time, the distributions will be coded as excess contributions distributions. In addition, the form will include the amount of any earnings (interest) that you received on your excess contributions.

At tax time, you'll need to examine your W-2 form from your employer closely. If the form does not include the amount that the employer HSA contribution in your taxable income, you'll need to add this amount as "Other income" on your taxes. You'll also need to include any earnings on the excess contributions reported on the 1099-SA.

Since your husband funds his own HSA and doesn't have any employer contributions to it, you might find it easier to withdraw the excess contributions from his HSA instead of yours. To do this, you need to tell his HSA bank that the withdrawal is an excess contribution withdrawal, so that it gets reported correctly on his 1099-SA. There won't be any changes to his W-2, and the only "other income" he'll need to report is any earnings on the excess contributions from his 1099-SA.

The instructions for Form 8889, line 13 explain what to do in the event of an excess contribution (note: The text here is from the 2013 version of the instructions):

Line 13

If you or someone on your behalf (or your employer) contributed more to your HSA than is allowable, you may have to pay an additional tax on the excess contributions. Figure the excess contributions using the following instructions. See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the additional tax.

Excess Contributions You Make

To figure your excess contributions (including those made on your behalf), subtract your deductible contributions (line 13) from your actual contributions (line 2). However, you can withdraw some or all of your excess contributions for 2013 and they will be treated as if they had not been contributed if:

• You make the withdrawal by the due date, including extensions, of your 2013 tax return (but see the Note under Excess Employer Contributions, later),

• You do not claim a deduction for the amount of the withdrawn contributions, and

• You also withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings.

Excess Employer Contributions

There are further instructions on what to do if you don't take care of this until a future year, but it is much better and easier if you take care of this before the end of this year, and handle it correctly on your tax return.