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Did our 2024 return with TurboTax. TurboTax calculated an underpayment penalty of $748. I paid it.   Just got an IRS notice stating I overpaid the underpayment penalty and they are issuing a refund.   The over payment was by over $600.   A simple calculation and TurboTax can not get it right.   I worry what else is wrong in my return and not discovered / disclosed by the IRS.   dew

My husband accidently gave our HSA account number and routing information to a retailer from whom he was expecting an EFT payment for the sale of a item.  That payment then resulted in an excess contribution of $185 to our HSA account since we had already made the maximum HSA contribution for the year in January.   It's my understanding that I can have the HSA account custodian do a "corrective distribution" or "return of the excess distribution".  If this is done before I file my 2025 income taxes, I will then not be subject to the 6% penalty for the excess contribution.  The $185 will be returned to me, but it will be treated as "taxable income".   Alternatively, I can leave the $185 in my HSA account so that it can be applied to my 2026 contribution.  That means I'll need to reduce my allowed 2026 contribution by $185 so that I won't have an excess contribution in 2026.  If I do this, I will be subjected to a 6% penalty in my 2025 taxes for the excess contribution.  That's preferred since 6% penalty is a lower rate that having it become taxable income.   Question 1: Does the HSA custodian need to do anything to apply the $185 excess contribution to my 2026?  For that matter, do they even need to be notified?   Question 2: How would this be handled in TurboTax for my 2025 and 2026 tax returns?  I assume for 2025, it's just a simple as a just recognizing a $185 excess contribution and assessment of the 6% penalty.  But for 2026, how do you indicate in TurboTax that the $185 excess contribution became part of the 2026 total contribution?  I've seen numerous posts on the community where it seems like folks are unable to get ride of an excess contribution and Turbo Tax just continues to carry it forward year-to-year (along with the 6% penalty).   Just trying to decide whether it will be easier to just bite the bullet and have the excess distribution returned to me as "taxable income" in 2025 and be done with it - versus have a messy TurboTax situation with my 2026 taxes.   Thanks in advance for any input!

My daughter received a scholarship for all expenses (tuition, room, board, books, transportation etc.  We withdrew the same amount from her 529.  I understand the 10% penalty is not applicable; however, is it correct that she/we pay taxes on both the room & board portion of the scholarship AND on the 529 distribution amount equal to room & board?  I realize we did not specifically pay it from our money rather with the schools funds.  The school did refund any excess balance of her scholarship to be used however she liked.  I guess it is not making sense to me to pay taxes on both room & board funding methods (scholarship & 529 distribution) if the 529 allows tax free distribution for Room & Board.   Is it correct that we have to report the 529 earnings as income too?  Again, I am only speaking of the room & board portion.  We fully understand the scholarship portion is taxable.