@Pat_9 wrote:
Thank you BOTH!
So let's say I choose to leave the fund on account and pay 6% every year that I have the remaining fund till it's drawn out - I'd just need to amend the 1040? I filed both with Turbo tax so maybe this'd be somewhat easier? time and cost effective?
No matter what you do from now on, you still need to file amended returns for 2023 and 2024 to report the excess contributions, remove the deduction, and pay the 6% penalty.
Going forward, if you decide the leave the funds in the account to spend down, you simply include that information with your regular 1040 tax return. When you do the HSA interview for your 2025 tax return, Turbotax will ask if you had any carryover of excess contributions from 2024, you will get this information from your (amended) 2024 form 5329. The program will take into account the carryover excess, any withdrawals for medical expenses, and calculate the new penalty, all as part of the normal tax return.
