You are not paying the 6% tax on excess contributions if the HSA does not have a balance.
- Enter Last Year's Excess Contribution from 2020 Form 5329, Line 48.
- Select No, I'm not going to make this withdrawal.
- What's the total value of all your HSAs? Enter 0 if you have emptied out the HSA. This will avoid any excess contribution tax.
The excess contribution will carry forward, but as long as you do not have money in your HSA, you will not pay any penalty. If you are covered again by an HDHP in the future without Medicare, then the excess contribution will be eliminated. It is only then that the excess contribution will go away entirely.
