Thank you for answering a complicated question.
From Jan 1 to Dec 24, 2021 he put $2640 into his HSA. The W2 says $2680 because they included his last $40 payroll deduction on Dec 31 in with 2021 for 2021 even though the employer's $500 on Dec 31 ended up as 2022 for 2021. The bank is including that same $40 as 2022 for 2021 on the 5498, so it's counted twice. The $500 was definitely not in the W2 amount. No error message when putting in $2680. I tried explaining to a supervisor at the bank that the $540 was never in the 2021 for 2021 amount on their 5498 but she said they are right. After a heated discussion she said she would send it to research.
My husband made a call to see about an excess contribution removal 6 weeks ago - they said no. He said he asked if the $540 hard posted on 2022 could be applied to 2022 instead of 2022 for 2021 and he says the rep said yes and walked him through some paperwork which he downloaded and sent to them. Either the bank rep gave him bad advice or he misunderstood what was happening. In any case, he filled out forms that allowed for a distribution of $540 and the "mistake" box is checked. The form doesn't say where the money was going.
No deposits other than payroll. Can that $500 be included as already-taxed income on his W2 and if so, how would we know?
I did some research and read that an employer can withdrawal money from an HSA for 7 reasons. A mistake is one of them and his employer did say the money wasn't supposed to hit the bank until 2022. He also did not ask for the money or expect it. Question is..who is considered to have made the withdrawal? Him or his employer? He filled out the papers requesting it to be removed- did he even have the right to do that if the money didn't come from him? His employer hasn't responded to his questions about where the returned money went. The bank suprevisor said we will get a check for $40 from someone (them or employer?) that we pay taxes on. But that's the same $40 the W2 has included in Box 12!
Bottom line is I just want this over and taxes filed on time. TurboTax will let us file if we disregard the $500. I'm not sure what to do about the Dec 31 $40 deposit from my husband which is counted for 2021 on the W2 and 2022 for 2021 on the 5498. Filing a 8889 that doesn't match the 5498 worries me. I'm afraid ignoring the $500 will cause trouble in the future. We do have otherwise simple taxes, average income and low audit risk.
Thank you for taking time to answer.
