HSA rollover to last year then back to this year

[Airborn22]

Hi,

I have a weird situation where I had $5300 missing to reach the HSA limit for last year (2022) so I contributed this year, before the tax return deadline, and submitted a rollover form to my HSA provider to roll over $5300 to last year. Then, for some reason, they rolled over $5300.02 so I called them asking what to do with those 2 cents that I'm over the limit? They told me to roll those over, back to 2023. I did so, but now those 2 cents show up as extra contribution both for 2022 and 2023. On the Form 5498-SA they sent me they also added those 2c.

I spent hours with the HSA provider on the phone but they just keep telling me that they will look into this. The extended deadline for the tax returns is coming up in a few weeks and I have no idea how to report this. I know that this is just 2c but I guess I'll still need to get my paperwork in order to not have any problems down the road. How should I report this?

The transaction history looks like this:

4/5/2023	Individual Contribution (Tax year: 2023)	$0.02
4/5/2023	Refund of Excess Contribution for Tax Year 2022	($0.02)
4/2/2023	Refund of Excess Contribution for Tax Year 2023	($5,300.00)
4/2/2023	Individual Contribution (Tax year: 2022)	$5,300.02
4/2/2023	Refund of Interest Earned on Excess Contribution	($0.02)

Thank you!

[dmertz · Accepted solution]

On your 2022 tax return, simply report a $5,300 contribution.

What they did was make a return of an excess $5,300.00 contribution made for 2023 which was required to include the net income attributable, $0.02.  They then treated the entire $5,300.02 as a contribution for 2022.  Finally, they made a return of an excess $0.02 contribution for 2022, with zero net income attributable because the amount was so small, and treated that $0.02 as a contribution for 2023.  From this I suspect that you'll receive a code-2 2023 Form 1099-SA reporting $5,300.04 in box 1 and $0.02 in box 2.  Such a Form 1099-SA would have no effect on your 2022 or 2023 tax return because the taxable amount in box 2 rounds to zero on your tax return.

At the moment it appears that you have a net contribution of $0.02 for 2023 in addition to what ever other amount you might have contributed for 2023.  You can take that into account when making any additional contributions for 2023, if eligible, or you could just ignore the $0.02 since it will round to zero.  $0.02 is a de minimis (insignificant) contribution error.

[Airborn22]

Thank you @dmertz, I appreciate your thorough response!