Thank you for initial feedback and thoughts on this topic. Some important points to identify:
- HSA extends from January 2023 thru Dec 2023
- HSA was again started in January 2024 per benefit election. Requested HSA contributions to be stopped as of March 1st 2024 due to HSA/FSA interaction making all HSA contributions in 2023 and 2024 now as ineligible.
- HSA contributions in 2023 were below $1,000 (well below max limit for HSA) and in 2024 so far contributions were below $200. HSA custodian has a withdrawal form that identifies requesting an excess contributions for a specific amount and also indicate the Tax Year. So for 2023 & 2024 will need to request refund for all contributions. These contributions will need to be marked as Other income be taxed due to HSA/FSA interaction.
- What is unclear is if HSA custodian will be able to refund in full or elect to just send over a corrected 1099-SA form with Box 2 marked as Earnings on Excess Contributions. Reason refund may not come back is because 2023 Gross distributions to pay for eligible health expenses were above the total 2023 contributed. There was more funds remaining than what was contributed in 2023 cause for HSA the funds carryover to new year unlike FSA which is use or lose it with only a portion that could be carried over.
- FSA extends from July 2023 thru June 2024. Unlike HSA, FSA has to complete its Term plan through June 2024. Contributions were for FSA were around $300 (well below max limit).
Tracking that in the HSA section of turbo tax based on how HSA interview questions are answered then will prompt you to enter excess contributions in an effort to avoid 6% excise tax penalty by have contributions taxed. Still will need the corrected 1099-SA tax form from HSA custodian which may require an extension for tax return if do no received the corrected tax form before April submission deadline.
Below is addition information have been looking to make sense of for this topic.
