We are trying to fix a mess due to contributions made to HSA while enrolled in medicare.
Some claim these are not excess contribution if they were made within allowable limit, but because my wife added funds to her HSA when she was no longer eligible to make contributions due to medicare coverage, these are considered excess contributions. I'm asking this again because I'm getting different answers from different people and no solution.
There is a rule which prohibits any contributions to HSA while enrolled in medicare. My wife filed an application for SS benefits in April 2024, she is over 65. She's still working and we're both insured under her family HDHP plan. I don't have an HSA account. The SS application was approved in May 2024 and her medicare coverage kicked in 6 months earlier in October 2023. Because she contributed to her HSA for 12 months in 2023 we were told to remove contributions for October, November and December 2023, which she did. She also removed any contributions for year 2024. She requested in May 2024 for those contributions to be returned and the HSA custodian sent her checks already which also included earning on those contributions. Her 2024 contributions for those three months were $692 and $1920 for year 2024 plus some cents for earnings. The HSA custodian said they are not going to send any corrected 1099 forms in 2024, instead they'll send 1099 forms for withdrawals in 2025 for both years, but I don't know if this is true, since they told us before that they'd issue corrected forms. I do believe those 1099sa forms or form will have distribution code 2. Since we don't want to file an amended 2023 tax return and override a bunch of forms we're looking for an advice how to approach this. Some say an amended 2023 tax return is not the right solution in this case.
As far as I understand, one option would be to wait until they send new 1099s and w2s forms in 2025 and take it form there, but some people advise to return 2023 contributions and only report excess 2024 contributions in 2025 as other income. Can someone guide and help us, since this is not a common issue, I'm worry that we'll have problems to fix this in TT and won't be able to e-file our next year's tax return. We would greatly appreciate any help.
