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to the third point: I called Fedelity to ask them transfer my excess contribution from 2017 to this year 2023, they said they couldn't do it. Only the excess money from 2022 can be used for next year
I am not sure which third point you are referring to. I assume that you have been paying the 6% penalty on the excess contribution every year since 2018. You should also pay the 6% penalty when you file your taxes for 2022 by April 18.
To stop the penalty, take a regular withdrawal from your HSA in an amount equal to the excess contribution. There will be no special distribution code when you get the tax form for 2023. When you file taxes for 2023 by April 15, 2024, report your HSA withdrawals. When the program asks if all the money was used for qualified medical expenses, answer No, and include the excess amount as an unqualified expense. The excess will be assessed income tax plus a 20% penalty, but you will not pay any penalty for that excess in the future.
You suggested that I tell TurboTax that I have a $4,050 excess contribution carried in from 2021. Initially I didn't see a way to do that. But then I went back to the interview question "Did you overfund your HSA in 2021?" I had answered "NO" because I did not overfund in 2021, I did it in 2020. BUT if I answer "YES", it allows me to enter last year's excess contribution carry-over. That fixed the problem. I think that question was misleading. Thanks for all the help.
@Opus 17 @So we realized that I overcontribted $180 into my HSA. It is my first year having one. We were waiting for my paycheck to come so I could withdraw from that contribution. So far I have been using the funds for medical expenses. As of my last paycheck, there was not enough in my HSA to withdraw and now the tax deadline has passed. What do I do to fix?
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