BillM223
Expert Alumni

Get your taxes done using TurboTax

You requested the withdrawal of excess contributions this year (i.e., after January 1st), right? The 1099-SA has not been revised since November 2019, so I am sure that the boxes are the same no matter what year it says. Don't worry about the year.

 

Yes, a distribution code of "1" is correct, because the reporting of the return of excess contributions is as a "normal" distribution. It's the HSA custodian's own paperwork that shows the difference.

 

Early next year (2022), you will receive another 1099-SA. This one will have a distribution code of "2" and box 2 will have the earnings on that $20. Box 1 may or may not have anything in it - it will be ignored anyway, because the excess was reported as income in 2020.

 

"My understanding is that if I withdraw the excess funds prior to April 15, it is just like the overfunding never happened and there is nothing special I need to do for my 2020 taxes (according to TurboTax)" - mostly correct. As soon as the excess was discovered by TurboTax, that amount was added to line 8 on Schedule 1 (1040) to be taxable income in 2020. However, other than withdrawing the money, there is nothing else you need to do.

 

OK?

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