HSA Excess Contribution in 2021 for 2020

[leothemack]

My employer made an excess contribution of $610 to my HSA on 1/4/21 for tax year 2020.

My HSA provider withdrew the $610 on 1/12/21, prior to filing my 2020 taxes.

When I filed my 2020 taxes, I included the $610 in my Other Income, and checked that I'd withdrawn the $610 prior to filing my taxes.

I just received my 1099-SA for 2021, and it includes the $610 distribution (Code 2 - Excess contributions).

Since I already accounted for the excess contribution in my 2020 taxes, how do I file my 2021 taxes (Form 8889) so that I'm not charged income tax and the 20% penalty on the $610 distribution that appears on my 1099-SA?

Since it's not strictly a medical expense or rollover, I'm not sure how to classify it as non-taxable, or how I can point to the prior year to say it was already taxed

[MaryK4]

Since you had the excess contribution removed and reported it on your 2021 taxes, after you enter the 1099-SSA, you should answer the question "Did you overfund your 2020 HSA? NO.  This will have the income reported which shows the correction.  (Normally you would have to go back and amend the 2020 to report the over-contribution as income, but you already did this).

Your HSA Summary should show the Total Distributions only.  (see below)

[leothemack]

Thank you, @MaryK4. In that case, what will Form 8889 look like? Specifically Lines 14a & 14b?

[MaryK4]

Here is the screenshot of the Form from TurboTax Desktop.  I just noticed that the 14b s for Rollovers and Excess Contributions...  @leothemack