I was able to solve my 2018 (previous year) excess contribution of $130:
Out of my 2019 1099-SA code-1, I said that $130 of the total is not for medical expense.
- I verified form 8889 line 16 = 130 (taxable distribution)
- form 8889 line 17b = 26 (20% penalty)
- form 5329 line 42 = 130 (2018 excess contribution)
- form 5329 line 44 = 130 (taxable HSA distrib from form 8889 line 16)
- form 5329 line 46 = 0 (prior year excess contribution is now zero) i.e. Problem Solved!
I was initially confused by the TurboTax statement, but after checking the actual forms form TurboTax 'print center', as recommended by @dmertz , it made sense to me. The confusion is with TurboTax saying:
- Prior year excess contributions $130 (my 2018 excess contribution)
- Excess employer and payroll contributions $10 (my 2019 excess contribution)
- Amount withdrawn by April 15, 2020 $10.
- We'll remove these amounts from your return. The remaining amount will be taxed the extra 6%.
This last statement is what was confusing to me. After checking the tax forms in 'print center', I was able to confirm that there is no remaining amount taxed at the extra 6%. But the way it is presented, it make it sound $130 remained to be taxed at 6%.
TurboTax should add a line confirming the prior year excess contribution is taken care of by the taxable distribution (it did not mention anything), and should calculate the "remaining amount taxed at 6%", in this case zero, but was not obvious the way it is presented by TurboTax.
