Level 18
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Retirement tax questions

First, you correctly indicated to TurboTax on your 2016 return that you would withdraw the excess before April 18, 2017.

This will cause TurboTax to add the amount of the excess to Other Income (Line 21, 1040), if the contributions were in the amount with code "W" in box 12 on your W-2.

Now you understand that the amount of the excess is being carried over to tax year 2017. To permanently eliminate this excess contribution, you must work with your employer to reduce the employer contribution/your contribution by payroll deduction in 2017 so that your total contributions in 2017 PLUS your excess carry over from 2016 are less than or equal to the annual HSA contribution limit.

When you have done that for 2017, then the excess will be used up, and you can go back to normal in 2018.

P.S. You should contact your HSA plan administrator to get the 1099-SA for the withdrawal of excess contributions for 2016, because you need to report the earnings on the excess in 2016.

P.P.S. your 2015 excess was rolled into 2016, so when you take care of 2016 in 2017, the 2015 excess will be gone, too.