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Back in 2016 the company I work for went through a huge transition. Lots of things changed, but the relevant part is that early in the year we switched accounting systems and HSA providers.

When I filed my 2016 taxes, I forgot about the second HSA provider, and so filed just the information provided by the first HSA provider. As it turns out, my company had a similar problem but in the opposite direction - my W-2 from them shows my HSA contributions from the second HSA provider but not the first.

The result is that it looks like I withdrew several thousand dollars from my HSA, but most of those withdrawals weren't marked as medical payments. So as you might expect, I received a nice letter from the IRS saying that since those withdrawals weren't for medical expenses, they were income, and as a result I owe extra taxes.

I now have the forms from both HSA providers, and I'm happy to send them to the IRS, but then it will be obvious that the HSA forms (mostly the 5498) don't line up with my W-2 where it shows HSA contributions. It will also be obvious that I over-contributed in 2016 (since neither my company nor I remembered about both HSA providers).

My company is not particularly interested in sending me an updated W-2 for 2016 (I don't even know if that's allowed). Their only advice is that I should contact my current HSA provider and ask for a withdrawal/refund of the rolled-over funds, which would then cause an updated 5498 to be issued.

  • Would this work?
  • Is this my best option for clearing up this situation?
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    If you sue someone (and you will get a golden opportunity to do so in Tax Court if the IRS rules against you, IRS literally tells you how to do this), then you will be able to use subpoena power to obtain any document or proof that you require. They can't say "that sounds like such an inconvenience". However I'm unclear: If your HSA contributions and uses were the same amount of money but with one provider, would they have exceeded the maximums or otherwise been illegal? – Harper Jun 8 '18 at 16:31
  • My HSA contributions, between the two providers, does exceed the annual maximum. In fact, my contributions to the second HSA provider exactly match the annual maximum, so the $500 I contributed to the first HSA is all too much. Because I had some rollover from 2015, my withdrawals in 2016 mean that I withdrew every penny of those 2016 contributions, plus $300. – Betty Crokker Jun 8 '18 at 16:48
  • Did you withdraw the $500 as excess contributions, or as reimbursements of medical expenses? – stannius Jun 8 '18 at 19:58
  • All of the withdrawals in 2016 were valid medical expenses. I didn't realize until last week that I had excess contributions. – Betty Crokker Jun 8 '18 at 20:16
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Call the IRS and ask how you should proceed. There is a form you can use instead of W2 if necessary but they might be able to make the adjustments on their end. If that's the case, they'll send you another letter asking you to accept the corrections and pay any tax owned if any.

Be prepared for a confusing menu with a lot of options and a long hold.

  • The IRS is not interested in my pesky phone call. The phone # provided takes me to a voice menu, and not one option is "talk to a human". Sigh. – Betty Crokker Jun 8 '18 at 20:17
  • No, but the voice menu should have options for "all other questions" or something similar. That's how you get into the hold queue for the humans. – Beanluc Jun 8 '18 at 23:41

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