Hello,
I come back this year for this issue again.
To summarize what happened last year, my employer overcontributed to my 2021 HSA by $329 and they asked to withdraw the overcontributed amount by myself. However, we mistook the withdrawal amount. Because I thought my contribution should match my W2, I requested a withdrawal of $800. I received the $800 distribution in March 2022. When I was working on my return, I found out the I can only withdraw the overcontributed amount, which is $329. I contacted the H.S.A custodian and they told me to send them a check and file a form called Return of Incorrect Distribution. I did so and thought we were all set. On my 2021 return, I selected that I would withdraw $329.
This year, I received an Form 5498 from the H.S.A custodian, saying my 2021 total contribution they received is $1,753.88, which is the original company contribution $1,283.34 plus return of incorrect distribution $470.54. I also received Form 1099-SA with $800 in box 1 and a distribution code 2.
The following is a table of the forms and amounts, hope it can make things clear.
| 2021 H.S.A on W2 | 2021 Form 5498 | Overcontribution withdrawal (March 2022) | Return of incorrect distribution (March 2022) | Form 5498 2022 | 1099-SA 2022 |
1st Job | $6,246.12 | $6,246.12 | | | | |
2nd Job | $483.34 | $1,283.34(Box 3: HSA contribution made in 2022 for 2021) | -$800 | $470.54 | $1,753.88 (box 3) | $800(box 1) distribution code:2 |
Total | $6,729.46 | $7,529.46 | | | | |
My question is how I enter these two forms? My 2021 return says I would withdraw $329, but now the 1099-SA says I withdrew $800. Will this case any problem?
And how should I answer the below questions?
Excess contribution deducted from your wages? I answered No
Did you overfund your H.S.A in 2021? I answered Yes
Enter the amount from Line48 on your 2021 Form 5329. I couldn’t find this form on my 2021 return. So I left this question blank. I see on my 2021 return schedule 1 line 8E Taxable HSA distribution $329 and on Form 8889 line 11 $7,529.
After I answer questions as the above, my refund increased by about $1,000. There must be something wrong.
Thank you!
Tina
