Thanks Bill. Only part of the withdrawal was done before Apr 15, 2023. The remaining $300 was done in Sep 2023 and that was taxed at 6% in last year's return. I tried one more thing in this year's return. Let me know if this looks good.
Page: Let's enter Sanjay's HSA contributions
Excess HSA contributions carryover from 2022 still in HSA account: <300>
* Any contributions you personally made : <3050>
(not through your employer)
Note: (TT pulled above value automatically from 2022
Page: Who made the excess HSA contribution?
<Me>
Page: Enter Last Year's Excess Contribution
<$300>
Page: You may want to withdraw money from your HSAs
It looks like Sanjay has an excess contribution of $300. This amount is being taxed an extra 6%.
Selected <OK, we will make/have made the full $300 excess contribution withdrawal by April 15, 2024.>
Now after the above step, the correct amount of $3050 is shown as deduction for me. Note that $300 had already been removed in Sep of last year.
Now in my Form 5329 the following is shown,
42 Enter the excess contributions from line 48 of your 2022 Form 5329. If zero, go to line 47. <300>
43 If the contributions to your HSAs for 2023 are less than the maximum
allowable contribution, see instructions. Otherwise, enter -0- <300>
44 2023 distributions from your HSAs from Form 8889, line 16 <0>
45 Add lines 43 and 44. <300>
46 Prior year excess contributions. Subtract line 45 from line 42. If zero or less, enter -0- <0>
47 Excess contributions for 2023 (see instructions) <blank>
48 Total excess contributions. Add lines 46 and 47. <0>
49 Additional tax. <0>
