How to remove HSA excess contribution earnings?

[schteffi]

I had excess HSA contributions of $3550 this year. TurboTax asked if I want to remove this amount. I said yes, as I have already removed this amount (plus earnings). However, TurboTax won't allow me to input $3,565, which is the amount (plus earnings), because the amount exceeds my contribution amount. How do I enter in the earnings as income?

[ThomasM125]

You need to report the earnings by entering form 1099-SA, which you should receive form your insurance company. You enter it by using these menu tabs in TurboTax:

1. Income and expenses
2. Less common income
3. 1099-SA, HSA, MSA

[schteffi]

There is not an option to input the earnings I had on the excess contribution. Only the excess contribution.

[BillM223]

If you removed the excess contributions for 2020 in early 2021, then you don't report the earnings until 2022. You should receive a 1099-SA in very late 2021 or early 2022 with the earnings in box 2 and the distribution code of "2" in box 3.

You should just withdraw the excess in 2021, and let the HSA custodian calculate the earnings and send them to you when they send them. You don't owe tax on the earnings that you withdrew in 2021 until you do your 2021 tax return - in early 2022.

So just enter the amount of your actual excess contributions for 2020 in TurboTax - the earnings will be taken care of later.