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HSA excess contribution distribution not being taxed

I have 2022 excess HSA  contributions that was withdrawn in 2023. As a result I received form 1099-SA with gross income reported for the distribution. In TT online, I have entered form 1099-SA details. But when I look at the printed Form 8889 Line 16 (Taxable HSA distributions), its shows a 0.

 

I thought any HSA distribution that is used other than medical expenses will be taxed. I was not asked any question by Turbo Tax, if this distribution was used for medical expenses.

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Accepted Solutions

HSA excess contribution distribution not being taxed

in 2022, were the HSA contributions through your employer, then if you indicated the withdrawal was done by 4/15/2023 , the withdrawal would be taxed in 2022 while the income is taxed in 2023.  on the other hand, if these were personal contributions (not through your employer) and you indicated they were withdrawn by 4/15/2023  since you got no deduction for the excess so there is no income or penalties from withdrawing that excess. you would only be taxed on the income. 

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2 Replies

HSA excess contribution distribution not being taxed

in 2022, were the HSA contributions through your employer, then if you indicated the withdrawal was done by 4/15/2023 , the withdrawal would be taxed in 2022 while the income is taxed in 2023.  on the other hand, if these were personal contributions (not through your employer) and you indicated they were withdrawn by 4/15/2023  since you got no deduction for the excess so there is no income or penalties from withdrawing that excess. you would only be taxed on the income. 

HSA excess contribution distribution not being taxed

You are right Mike. I checked back my 2022 return and the excess employer contribution has been already taxed as "Income from federal Form 8889" and included in the Schedule 1, of 1040.  That makes sense now. Appreciate your response.

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