Excess contribution to HSA and withdrew more than I should

[scuitax]

I had excess employer contribution to my HSA in 2023. I withdrew the excess before 4/15/2024. However, I miss calculated and withdrew $50 more than the excess amount. What should I do in turbo tax to get over the error?

[tagteam]

Please check back. Can you answer this one @dmertz?

[dmertz · Accepted solution]

The tax code permits the return of only actual excess contributions, accompanied by attributable earnings.  If the amount distributed as a return of contribution exceeds the amount of excess contributions and attributable earnings by $50, the $50 constitutes a regular distribution from the HSA.  Because the HSA custodian will generally be unaware that more than the permissible amount was distributed as a return of contribution unless you inform them of the fact, it's likely that the 2024 Form 1099-SA that you receive will be technically incorrect and correct reporting will require entering into 2024 TurboTax the two Forms 1099-R that you should have received if reported according to the law.  Doing so would require mailing your 2024 tax return with explanation.

Because the tax code permits only actual excess contributions to be returned, I don't think that there is any way in TurboTax to enter more as having been returned than the actual amount of the excess.