What the HSA custodian meant is this:
1. As soon as TurboTax knew you had made excess contributions, this amount was added to line 8 on Schedule 1 (1040) as Other Income. You did not need to enter anything.
2. The earnings on this excess will be reported to you in a 1099-SA that you will probably receive in early 2022. This will go on your 2021 tax return.
3. If TurboTax added the excess to line 8 on Schedule 1 (1040) on your 2020 return, there is nothing to amend. TurboTax has already taken care of it.
"The distribution of excess that was processed will reflect on the 2021 1099-SA as it was removed in 2021.""
Yes, the distribution will take place in 2021, but the tax effects of the excess being taxed is happening in your 2020 return. Only the earnings will be taxed in 2021.
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