Option #1: withdraw the excess contribution from your account and include it as taxable income for that year. You must do this by the due date (including extensions) of that year’s tax return. Also, you must withdraw any income earned on the excess contribution from your HSA and include the earnings in “Other income” on that year’s tax return. (contact the administrator/trustee to do this option because they must report withdrawal in income withdrawn to the IRS. they calculate the income earned if any)
Option #2: If you don’t remove an excess contribution by your tax return filing deadline, you must include it as taxable income for the year you made it and pay a 6% excise tax on the excess contribution and any associated earnings. However, if you reduce your HSA contribution for the next year by the amount of the excess contribution, you won’t have to pay the excise tax in following years.
