So when you did your 2021 return in early 2022, did TurboTax not tell you about the excess contributions? I am trying to understand what actually happened.
"When I was approved for Survivor benefits in June 2022, I was automatically enrolled in Medicare Part A back to September 2021," - yes, when you start Social Security. you are required to start Medicare if you are 65.
"thus making my September thru December 2021 HSA contributions excess contributions, along with all of my 2022 contributions. " Yes, the 6 months of backdating catches nearly every taxpayer by surprise.
"I stopped my HSA contributions in July 2022." - So, are you saying that you reported the excess contributions for 2021 in July 2022?
"I requested and received a distribution of excess HSA contributions for 2021 from September thru December, and another excess distribution for 2022 (January thru July)." - So you asked for the return of the excess for 2021 and 2022 separately?
"I received two 1099-SA’s for 2022 – one for normal medical distributions" - may I assume that you received a separate "normal" 1099-SA for medical expenses for 2021?
"and one for the combined 2021/2022 excess contributions distributions. " - You mean you received only 1 1099-SA with a distribution code of '2'? (box 3).
"I have not been able to determine how/where to enter the 2021 excess contributions distribution as income for 2022." - You have a problem here. You are not permitted to withdraw excess HSA contributions after the due date of the return. The HSA custodian should have asked you if you had filed for an extension when you asked to withdraw the 2021 excess; if you had not, then they should NOT have sent you the excess. This means that not only is the one 1099-SA that you received for the excesses not valid (they should not be together) but you should not have received a 1099-SA for the excess withdrawal for 2021anyway.
If you had received a valid 1099-SA for the 2021 excess, it would have been entered on the 2021 return, but I can't advise you to just file an amended return, because the HSA custodian made a mistake, and at this point will be very reluctant to fix it.
"Is there a penalty due for the 2021 contributions that became excess contributions when, in June 2021, I was retroactively enrolled in Medicare Part A back to September 2021? " - There is a penalty if you make excess contributions in a year and then do not fix the issue by the due date of the return. If this happens, then the excess is "rolled over" to the next year, with a 6% extra excise tax. However, at this point, it is too late to withdraw the 2021 excess without penalty.
Do I need to file a corrected 2021 return?" - I am going to have to ask you a lot of questions first.
#1. What was the amount of the excess for 2021?
#2. When did you file your return in 2022 for 2021?
#3. What was the amount of the excess for 2022?
#4 Have you filed your 2022 return yet (I suppose not)?
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