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Retirement tax questions
Yes, the issue is that if you do not withdraw the excess by the due date of the return, then you can't withdraw it as an excess contribution to cure the problem.
TurboTax is correctly applying the rules.
As I noted above, if you have a lot of money in the HSA, and don't want to see it frittered away with the 6% year after year, you can do the one-time distribution to get rid of it.
So let me understand - you did withdraw the excess at some point (but after the due date of the return)? Was the 1099-SA on your 2024 return? If so, you can go into the spot where you entered the 1099-SA and change the dialogue so that you mark that the distribution was NOT for qualified medical expenses (whether or not they actually were). This will add the distribution to Other Income and hit you with the 20% penalty, but as I noted above, the excess will be gone.
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