dmertz
Level 15

Deductions & credits

If by April 18, 2023 you filed your tax return or requested a filing extension, yes, you have until October 16, 2023 to request a return of the excess contribution made for 2022.  The HSA custodian will make a distribution of the excess adjusted for investment gain or loss to accomplish the return of the amount that you request to be returned.

 

You'll still owe with your 2022 tax return a 6% penalty on the excess contribution made for 2021.  To eliminate that penalty for 2023 you'll need to make a regular distribution equal to the amount of the excess, with no adjustment for investment gain or loss, and treat that distribution on your 2023 tax return as taxable (not used for qualified medical expenses).  In addition to income tax (which you will effectively be paying twice on this money due to having to include it in income on your amended 2021 tax return), the distribution will be subject to a 20% extra tax as described by Opus 17..

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