Excess contribution (made with post tax dollars) and related earnings were both reversed in 2024 and reported accordingly for tax year 2023. Now the custodian of the HSA has issued a 2024 1099-SA for the distribution. Unfortunately, if I enter this form in TurboTax the software doesn’t enable me to qualify it as a reversal distribution made for a prior tax year reversal of an excess contribution. TurboTax is applying the income and excise tax penalty on an unqualified distribution with earnings. The tax liability is actually reflected correctly if the 1099-SA are omitted from the TurboTax calculation. I’m not entirely comfortable with this solution.
