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My employer and I contributed to an HSA in 2016. I am ineligible for HSA and am removing the money. Do I need to report the employer contribution as additional income? If so, how and where?

 
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My employer and I contributed to an HSA in 2016. I am ineligible for HSA and am removing the money. Do I need to report the employer contribution as additional income? If so, how and where?

Were your contributions made by payroll deduction (or by your employer)? Did you have the employer issue a corrected W-2, or are you still working off the original W-2 off has the code "W" in box 12?

If you have the original W-2 with the code "W":
Add the amount that you withdrew to Other Income.
Or, conversely, in the HSA interview, you can indicate for your HSA that you were not in an HDHP on December 1 and on the next screen indicate that you were not in it in any month. Then, your entire contribution should be considered "excess". If so, you can agree to withdraw the entire amount before April 18th. This will cause TurboTax to add this amount automatically to Other Income (so you don't have to). Also remember to actually contact your HSA plan administrator to request a Mistaken Contribution form (sounds like you already have).

If you have a corrected W-2 in which your HSA contributions were removed (i.e., the HSA contributions were added back to Wages in boxes 1, 3, and 5):
Do nothing. You have no deduction.

If you made the contribution independent of your employer,
Don't enter this contribution in the HSA interview. This would have been done on the "Let's enter [your name] HSA contributions screen" (see screenshot below).
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