Excess HSA Contribution

[Goodeboys]

I overfunded my HSA account in 2025 due to signing up for Medicare Part A mid year when I turned 65. I asked the HSA custodian to process a Return of Excess Contribution for the amount I contributed from June 2025 when I turned 65 through mid October 2025 when I realized my error and stopped making contributions.  The 2025 return of excess contribution was processed in January 2026, well in advance of the 2025 tax filing deadline. It is not clear to me when this excess contribution gets reported on my tax return.  The figures in question are $2792 in contributions and $18.53 in interest.  I have not received a 1099-SA code 2 from the custodian yet.  Thank you!

[RobertB4444]

When you receive the 1099-SA and enter it into your tax return you will immediately trigger the issue for overcontribution.  At which point you will tell the system how much you pulled out of your HSA and it will be added to the return and solve the problem.

[Goodeboys]

That's what I figured should happen.  It's funny though - the custodian has issued the 1099-SA with code 1, but not the one with code 2.  Maybe it's delayed because they just processed the distribution of the excess amount in early January.  I'll give them a call. I'm anxious to do the right thing and put this behind me.  

Thank you!

[dmertz]

In the HSA section, when TurboTax indicates that you had a $2,792 excess contribution just indicate you had $2,792 of contribution returned.  If the excess was contributed through your employer, TurboTax will add this amount to your income by including it on 2025 Schedule 1 line 8f.  There will be no penalty on Form 5329.

As for the $18.53 of interest, because the distribution occurred in 2026, the interest will be reported on a code-2 2026 Form 1099-SA that will be taxable on your 2026 tax return.  You will only receive a 2025 Form 1099-SA for the distributions you received in 2025, presumably used to pay qualified medical expenses.

[Goodeboys]

Hi dmertz, 

that is why I am confused - I input the 1099-SA code 1 information, just as in years past.  When I indicated that I was 65 and had Medicare, it asked about "last year's" excess contribution and instructed me to check my 2024 return for the amount.  That doesn't make any sense.  The excess contribution was made in 2025, but there is no where to provide that information.  Why is it asking for 2024 information?  No errors were made in 2024.  

Can you tell me where in the HSA section it will allow me to enter the excess/returned fund amount?  

Thank you. 

[dmertz]

Because you were not eligible for all of 2025, TurboTax asks about 2024 to see if you used the last-month rule in 2024.  Indicating that you were covered by an HDHP plan for all of 2024 prevents TurboTax from assessing taxes on any amount contributed for 2024 in excess of the amount that would have been permissible without the last-month rule.