"There was only $1,600 contributed to your husband's HSA for 2021, all by his employer. Why do you think that $500 was also contributed to his HSA?"
There was no $500 contribution in 2021--it was in 2020. Husband contributed $1000 directly to his HSA in 2020 (not via payroll deduction). While doing our 2020 tax return in March 2021, I learned (from TT) that husband had a $500 excess contribution to his HSA, so he withdrew $500 in March 2021.
"Yes, this is correct, because all $1,600 was reported on the W-2 in box 12 with a code W. There is no $500 contribution. Again, why do you think there is?"
So the $500 was contributed in 2020 and withdrawn in 2021. I just want to know that we're paying the taxes on that excess $500. Maybe that was resolved in 2021 since he withdrew the excess $500 before we filed our return?
"NOTE: 1099-SA distributions have nothing to do with the annual HSA contribution limit. The excess is ONLY the amount of the contributions in excess of the annual contribution limit."
I think what's confusing me is that $2120 is reported on the 1099-SA with distribution code 2 ==> excess contribution. That code 2 on the 1099-SA seems to say (to me at least) that the entire $2120 is an excess contribution.
@BillM223
