@ShawnDL wrote:
What does it mean to “let it ride”? How do I/where do I make the selection? We’ve already filed our taxes claiming our 22 yo as a dependent. She’s still in school but got a full time job mid October 2024 and now has a HDHP with an HSA. We did not know that she could not have both and kept her on our insurance which is not an HDHP until the end of the year. Her employer apparently made a contribution to her HSA at the end if 2024 and that “excess” is now a problem on TT. She will be filing independently for tax year 2025, so rolling it over is fine. She won’t exceed the maximum contribution for 2025. But I don’t understand how to roll that excess over to 2025 on the forms. .
For 2024, the excess must be added back to her taxable income, and is subject to an additional 6% penalty.
For 2025, she just has to contribute less than the maximum allowed. For example, suppose her 2024 employer contribution was $500. The 2025 limit for single HDHP coverage is $4300. All she has to do is contribute equal or less than $3800. Your tax software will automatically apply the $500 excess from 2024 to the new limit for 2025, and it won't be considered excess any more. This is worked out on form 5329.
