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Get your taxes done using TurboTax
Please let me confirm, you are going forward with the HSA or the FSA in 2023?
If you will have only the HSA in 2023, then what you will need to do is make sure that between you and your employer (and your spouse and anyone else) that you do not contribute more than your 2023 annual HSA contribution limit MINUS the carryover. That is, you have to leave room for the carry over to be "used up" in 2023. If you contribute the full HSA contribution limit in 2023, you will just cause another excess contribution problem and perpetuate the problem, 6% each year.
If you have an FSA in 2023, then we have a different problem - you can't use this method (above) to use up the carry over, so you will pay 6% excess tax every year. Forever.
The way you fix the carryover in this latter case is by taking a distribution from the HSA for the amount of the carryover (i.e., calling the HSA custodian and asking for a check for that amount). This amount is added to your Income, along with a 20% penalty...but at least the carryover stops in the year that you do this.
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