My situation:
- Had a family HDHP plan for two months in 2021, the rest of 10 months in PPO plan.
- So my HSA contribution limit us $1,200 (From 2/12*$7,200)
- My new employer contributed $2,000 to my HSA as a benefit (NOT deducted from my salary). That means I have $800 excess HSA contribution in 2021.
- I withdrew the $800 excess in Dec 2021.
So I entered the form 1099-SA with the excess contribution withdrawal information (gross distribution) and the relevant '2' distribution code for excess contribution withdrawal. I was expecting TurboTax to treat the $800 withdrawal as taxable income. But it doesn't, its summary on HSA summary shows $0 taxable distribution and the other amounts are correct. I appreciate any pointers and if I miss some important information about this HSA excess contribution. I think TurboTax assumes I continue to have HDHP in 2022, which would make me eligible for the full $7,200 HSA limit in 2021 (based on the full 12 months rule) and resulting in thinking I am not over contributing? If so, how do I correct it?
Thanks in advance.
