I did not have a HPDP plan in 2024; however, my employer contributed $2500 to my HSA account in 2024. I just realized the mistake on W2 as it was not added to box 1 taxable wage but it showed $2500 in Box 12 as "W". Can you advice if the following plan is appropriate?
1. I will report this to employer asking them to issue a W2c to include the excess amount in Box 1 taxable income. If I return the excess contribution to the employer now, should they remove 12W in W2c or will 12W still be in W2c?
2. No further tax withholding is needed as I will pay any extra in the 2024 Federal and state tax returns.
3. I will work with HSA firm to withdraw the $2500 + any earnings before April 15, 2025.
One complication is that if the employer does not remove 12W on W2c, I will need to report it on Form 8889. Can you advise if Part II line 14 and 14b are the right places to include the $2500 + any earning in 2024? Say, I had qualified medical expense withdrawal $100 in 2024, the earning on $2500 was $15 in 2024, line 14a would be $2615, and line 14b would be 2515 that would be withdrawn by April 15, 2025. Is this the right way to do it?
Even so, Turbo tax shows an error and tries to force me to choose "self-only" or "family" in Part 1. I guess that Turbo Tax thinks that since there was HSA contribution, there should be a HPDP plan. How do I overcome this Turbo Tax problem? If it persists, can I ignore the error and submit the return electronically?
Thank you experts in advance for your guidance.
