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If i file my taxes right now in such a way where i don't agree to withdraw the excess HSA employer contribution and pay the tax on my excess contribution ($980) and the 6% penalty on that 980$ . Then later suppose on April 5 , I change my mind and able to get that excess contribution back from the bank. Then can i declare that refund of excess contribution in 2017 return ? as I don't want to go through the hassle of filing the amended return for just $59.
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Yes, you may file your 2016 return without withdrawing the excess HSA contribution for 2016.
To avoid the 6% penalty, though, you would need to amend your 2016 return, since that is the year to which the penalty applies.
If you file your 2016 tax return without indicating that you withdrew the excess HSA contribution, then you will be able to withdraw it in future years, but you must pay a 6% penalty on the excess contribution plus earnings, in addition to income and payroll taxes on that amount.
More information about HSA contributions and distributions can be found in IRS Publication 969, Health Savings Accounts.
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