I used TurboTax Premier for 2020 tax year returns and I realize it made a mistake in handling the removal of excess HSA contribution.
I made too much contribution to my HSA account in 2020. When I was doing my taxes (with TurboTax Premier online version) in February 2021, TurboTax told me of this issue, and I contacted my HSA provider to remove the excess contribution. I went back to TurboTax, followed the prompt and confirmed that I removed the excess contribution, and then TurboTax automatically applied the removed excess amount to Form 1040 Schedule 1 Line 8 as "Other Income".
I think this is wrong: even though the excess contribution was made to tax year 2020, because I did the removal in February 2021, it should count as distribution for tax year 2021. In fact my HSA provider didn't provide me a 1099-SA for tax year 2020 for this exact reason. That means when April 2022 comes and I need to do my 2021 taxes, I'll receive a 1099-SA which lists the removal, and I'll have to pay taxes on it again.
Is my understanding correct? How do I correct for this?
