How can I redeem the excess HSA funds

[BMcCalpin · Accepted solution]

If you were told by TurboTax that you have excess HSA contributions, you will be asked if you will withdraw them before the due date of the tax return (I assume that is what you meant by "redeem").

To actually carry this out, you will contact the HSA administrator (the bank or financial institution who gave you the debit card with which to pay for medical expenses) and tell them that you want to withdraw excess contributions. In fact, you might look online at their website and see if they have an online form for this. 

If the HSA agrees to do this, they will send you a check for the amount of the excess. If this excess came from the amount on your W-2 in box 12 with a code of W, then TurboTax will have already added this amount to line 8 (Other Income) on Schedule 1 (1040).

Yes, this will increase your tax, but you will have more than that in the check coming from the HSA administrator to pay for the tax.

[Edited 3/26/2020 2:08 pm CDT - update for 2019]