I just removed $3375 excess HSA contribution of 2020, plus $2.10 interest from it. TurboTax adds $3375 back as income to be taxed, how about $2.10 ?

[mmike0]

Should $2.10 also be taxed?
Also, this excess removal will be reported in next year 1099SA, can TurboTax figure out that it was done in 2020 return?

[Opus 17]

Because the $2.10 was paid to you in 2021, it will be income on your 2021 tax return. 

[mmike0]

Thanks for the reply.

So, TurboTax will only add box2 (should be $2.10) of 1099-SA of 2021 as Other income in 2021 return?

I also have two months excess contribution in 2021. I am planning to withdraw it after 5498-SA of 2020 issued (to avoid confusion). At the end of 2021, I then will receive 1099-SA including withdraw both for 2020 and 2021 excess contributions. Would this cause problem in 2021 return? or should I withdraw 2021 part at the beginning of 2022 (to avoid two withdraw in one 1099-SA)?

Thanks in advance.

[Opus 17]

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@mmike0 wrote:

Thanks for the reply.

So, TurboTax will only add box2 (should be $2.10) of 1099-SA of 2021 as Other income in 2021 return?

I also have two months excess contribution in 2021. I am planning to withdraw it after 5498-SA of 2020 issued (to avoid confusion). At the end of 2021, I then will receive 1099-SA including withdraw both for 2020 and 2021 excess contributions. Would this cause problem in 2021 return? or should I withdraw 2021 part at the beginning of 2022 (to avoid two withdraw in one 1099-SA)?

Thanks in advance.

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I expect you would get one 1099-SA for 2021.  It will show the total of withdrawals made during 2021.  The earnings should be in box 2 and the distribution code in box 3 should be "2" for excess contributions.   I'm not quite what options Turbotax would give you as far as only reporting the 2021 part of the excess.  I think that the taxability of the excess contribution will come from the amount of excess contributions you report, rather than the figure on the 1099-SA.  But I would say to cross that bridge when we get there.