The HSA custodian is going to remove the excess contribution ($11.08 balance of what’s left of a $13 excess contribution in 2023 to correct a $1.92 overdraft in the account.) Presumably they will code the removal of the $11.08 as an excess contribution (not a deposit correction as mistakenly told to him before.) The HSA balance will then be zero.
My son’s 2024 tax return will reflect the $13 excess on Form 5329 along with the $1 excise tax. He will also amend his 2023 return to include Form 1040-X, Form 5329, Form 8889 (to remove the $13 erroneously reported on Line 2) and maybe his 2023 5498-SA showing a $13 contribution and an $11.08 balance. Does this sound right? Would you include anything else with the amended 2023 return?
Also, in the 2025 Tax Year when his 1099-SA shows removal of the $11.08 as excess contribution, is he then somehow going to have to explain what happened to the $1.92? His HSA balance will be zero, so that will have effectively removed the excess. There were no earnings on the $13 and the $13 came from his checking account after-tax, so no HSA deduction on his original 2023 tax return.
