topic I just removed $3375 excess HSA contribution of 2020, plus $2.10 interest from it. TurboTax adds $3375 back as income to be taxed, how about $2.10 ? in Deductions & credits

I just removed $3375 excess HSA contribution of 2020, plus $2.10 interest from it. TurboTax adds $3375 back as income to be taxed, how about $2.10 ?

mmike0 — Mon, 15 Mar 2021 06:29:54 GMT

Should $2.10 also be taxed?
Also, this excess removal will be reported in next year 1099SA, can TurboTax figure out that it was done in 2020 return?

Re: I just removed $3375 excess HSA contribution of 2020, plus $2.10 interest from it. TurboTax adds $3375 back as income to be taxed, how about $2.10 ?

Opus 17 — Mon, 15 Mar 2021 18:52:12 GMT

Because the $2.10 was paid to you in 2021, it will be income on your 2021 tax return.

Re: I just removed $3375 excess HSA contribution of 2020, plus $2.10 interest from it. TurboTax adds $3375 back as income to be taxed, how about $2.10 ?

mmike0 — Tue, 16 Mar 2021 03:47:17 GMT

Thanks for the reply.

So, TurboTax will only add box2 (should be $2.10) of 1099-SA of 2021 as Other income in 2021 return?

I also have two months excess contribution in 2021. I am planning to withdraw it after 5498-SA of 2020 issued (to avoid confusion). At the end of 2021, I then will receive 1099-SA including withdraw both for 2020 and 2021 excess contributions. Would this cause problem in 2021 return? or should I withdraw 2021 part at the beginning of 2022 (to avoid two withdraw in one 1099-SA)?

Thanks in advance.

Re: I just removed $3375 excess HSA contribution of 2020, plus $2.10 interest from it. TurboTax adds $3375 back as income to be taxed, how about $2.10 ?

Opus 17 — Tue, 16 Mar 2021 14:12:33 GMT

@mmike0 wrote:

Thanks for the reply.

So, TurboTax will only add box2 (should be $2.10) of 1099-SA of 2021 as Other income in 2021 return?

I also have two months excess contribution in 2021. I am planning to withdraw it after 5498-SA of 2020 issued (to avoid confusion). At the end of 2021, I then will receive 1099-SA including withdraw both for 2020 and 2021 excess contributions. Would this cause problem in 2021 return? or should I withdraw 2021 part at the beginning of 2022 (to avoid two withdraw in one 1099-SA)?

Thanks in advance.

I expect you would get one 1099-SA for 2021. It will show the total of withdrawals made during 2021. The earnings should be in box 2 and the distribution code in box 3 should be "2" for excess contributions. I'm not quite what options Turbotax would give you as far as only reporting the 2021 part of the excess. I think that the taxability of the excess contribution will come from the amount of excess contributions you report, rather than the figure on the 1099-SA. But I would say to cross that bridge when we get there.