Do I need to do anything for CA to handle HSA excess contributions in 2019 that I corrected with a distribution in 2020?
I originally contributed $7000 to my HSA in 2019, but was actually limited to $1750. I distributed the $5250 in 2020 and reflected that my 2019 Fed in TurboTax. However, TurboTax still added all $7000 to my CA income.
My guess is that is to be expected, since CA treats it all as income. So all $7000 is income. And the distribution will just be ignored by CA (since it was taxable all along). Does that sound correct? Thx!
As additional background, I originally contributed $7000 to my HSA in 2019. That is what is reflected in my 2019 W-2 Box 12 W and 2019 5498sa. However, I later discovered I was limited to $1750 due to getting married in March and my wife having an FSA. I removed the $5250 excess in this calendar year on 3/10/20. I told TurboTax I only had three months of eligibility, so it automatically added the $5,250 to Other Income on line 8 on Schedule 1 (1040). Details are in https://ttlc.intuit.com/community/taxes/discussion/re-i-removed-a-2019-hsa-5250-excess-in-this-calen...
