The instruction for Form 1040 line 1h indicates items the must be included as Other Earned Income, but I don't see that as an exhaustive list. I compare it to excess deferrals only to point out that had the money not been taken out of the pay that it would make sense to me that the excess should appear on line 1h because it did not otherwise appear on line 1a. The Items identified for inclusion on Schedule 1 line 8f are items that that are not excess contributions and are not from compensation.
Perhaps my concern is even more basic. Instead of moving the excess HSA contribution from Schedule 1 to Form 1040, might it make sense to include the code-W amount, excess or not, in compensation that will support an IRA contribution (although I don't imagine the IRS would see it this way)? It seems inequitable that someone who has on their W-2 $2,000 in box 1 and $1,000 with code W in box 12 can only make a $2,000 IRA contribution while someone who has $3,000 in box 1, nothing with code W in box 12 and makes a $1,000 personal HSA contribution is permitted to make a $3,000 IRA contribution. Why should it matter whether the HSA contribution is made through the employer or not? (Maybe it's a bad idea to make HSA contributions through the employer.)
