HSA Overcontribution and Withdrawal 2024

[ieiepop]

In 2024, I had an HDHP plan for only five months due to a job change, but I mistakenly overcontributed to my Fidelity HSA by contributing the full annual limit of $4,150. I later realized the mistake and contacted Fidelity to withdraw the excess amount within the same year.

I received a 1099-SA form showing the gross distribution amount, with distribution code "2," indicating a withdrawal of excess contributions.

My questions are:

When entering this information in TurboTax, should I report my 2024 personal HSA contributions as the full $4,150 (including the overfunded amount), or only the amount corresponding to my five months of HSA eligibility, since I have already withdrawn the excess contribution? How can I verify that I have entered everything correctly in TurboTax?

I have entered the 1099-SA gross distribution details, will this amount be taxable?

I appreciate your guidance on this.

[dmertz]

Yes, your contributions entered into TurboTax should be $4,150.  After TurboTax calculates that only $1,729 of HSA contribution is permissible, indicate that you will have the $2,421 of excess contribution removed.  If the contribution was made through your employer, the $2,421 plus the amount shown in box 2 of the code-2 Form 1099-SA will be included as Other income on your tax return.  If the contribution was instead a personal contribution (not made through your employer), you will see an HSA contribution deduction of only $1,729 and you will see only the amount from box 2 of the Form 1099-SA included as Other income.