HSA Overfunding Question

[bbodb1]

Hello.

My wife and I each have HSA’s and we are old enough to be eligible for the extra catch up amount so between the two HSA’s we can contribute $9,300.  In planning our HSA contributions for 2024, I forgot to allow for the fact my wife’s employer also adds money to her HSA account ($800 over the course of the year).  As we neared the end of 2024, I realized this $800 was going to push us over our maximum contribution of $9,300 for 2024 (by $650).  

With this in mind, I contacted my wife’s HSA custodian and requested a distribution of $650 (this was in November of 2024).  The $650 (and the profits attributed to the investment of the $650) were mailed to us in the form of a check from the custodian.  

As I looked at the W-2 for my wife, her W-2 did NOT show the adjusted amount but rather the pre adjustment amount.  Where/how can I adjust my wife’s HSA contribution to reflect the lower amount?  In other words, where in TurboTax can I enter the amount we received (to correct the over contribution) in late 2024?  As things currently stand in TurboTax, we have over contributed to our HSA in 2024.  

Thanks in advance for any ideas and/or suggestions you can offer.  

[Mike9241]

the w-2 is correct. your employer does not adjust for the removal of excess HSA contributions. You should be getting form 1099-SA to reflect the withdrawal. This withdrawal and earnings thereon should appear on line 14b of the 8889. 

[MarilynG1]

You should receive a form 1099-SA from your HSA Plan Administrator, with a Code 2 in Box 3 on the form, indicating a distribution for an Excess Contribution.

Since your 1099-SA indicates you did not use the distribution for qualified medical expenses, you will pay income tax on the portion you used for nonqualified expenses. You report the taxable amount on the “other income” line of your tax return and write “HSA” beside it. 

You will also have to pay an additional tax of 20 percent on the taxable portion of your distribution, which will calculate on Form 8889. (TurboTax will handle the calculations and fill in all the right forms for you.)

Here's more detailed info on Form 1099-SA.