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The software calculating the HSA excess personal contribution withdraw does not allow me to proceed, if I've already withdrawn more than I should have.

Forum|Forum|1 year ago
February 9, 2025
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I knew I contributed too much in 2024, estimated my excess, and withdrew [too much] it in October. The software doesn't allow me to proceed because I withdrew too much. Or should I just change the amount withdrawn to match what the software tells me I should have withdrawn?

Best answer by dmertz

Since these were all personal contributions, if you ignore the fact that you had more contribution returned than actually permitted, you can get the correct result by just entering the net contribution instead of the actual contribution. TurboTax will then not indicate any excess contribution that needed to be returned and your Form 8889 will show on lines 2 and 13 only the net amount contributed. You'll still need to enter the code-2 From 1099-SA to include in income the amount shown in box 2a.

If you choose to not ignore the fact that more than permitted was returned, you would need to enter a code-2 Form 1099-SA reflecting what the amount returned should have been, enter a code-1 Form 1099-SA for the the remainder (which could be applied to qualified medical expenses), then provide explanation with your printed and mailed tax return as to why your tax return does not reflect what is shown on the Form 1099-SA. (The HSA custodian is not going to change the original Form 1099-SA since they did what you told them to do.)

D

dmertz

Employee

The problem occurs because the law permits only actual excess contributions to be removed by return of excess contribution and TurboTax enforces this limitation. Amounts distributed beyond the amount required to be distributed to return the true excess contribution are technically regular distributions.

What is the code in box 3 of your 2024 Form 1099-SA?

Was the contribution made through your employer and was reported with code W in box 12 of your W-2 or was it a personal contribution?

TREMAuthor

Thank you, @dmertz

Box 3 code is "2 excess contributions"

In 2024, all contributions were personal, no W-2 contributions. (family plan, plus two "catch-up" contributions)

No other withdrawals were made for medical expenses. Only withdrawal was for the excess contribution (HDHP was had only for first part of the year). I calculated the excess at my HSA providers site (Fidelity), and withdrew in October. Apparently it was a couple hundred too much. In hindsight, I should have waited until I prepared my taxes.

I have some non-reimbursed receipts that could be used, if needed, toward the extra withdrawal amount.

D

dmertzAnswer

Employee

Since these were all personal contributions, if you ignore the fact that you had more contribution returned than actually permitted, you can get the correct result by just entering the net contribution instead of the actual contribution. TurboTax will then not indicate any excess contribution that needed to be returned and your Form 8889 will show on lines 2 and 13 only the net amount contributed. You'll still need to enter the code-2 From 1099-SA to include in income the amount shown in box 2a.

If you choose to not ignore the fact that more than permitted was returned, you would need to enter a code-2 Form 1099-SA reflecting what the amount returned should have been, enter a code-1 Form 1099-SA for the the remainder (which could be applied to qualified medical expenses), then provide explanation with your printed and mailed tax return as to why your tax return does not reflect what is shown on the Form 1099-SA. (The HSA custodian is not going to change the original Form 1099-SA since they did what you told them to do.)