1099 SA Excess Contribution

ktramo17 · ‎February 17, 2026

Hello

In 2022, my wife overfunded her HSA by $703 and in 2022, 2023 and 2024, we paid 6% excise tax on the $703. In tax year 2025, we distributed the $703 out of the HSA and received a 1099-SA which included the $703 in box 1 and box 3 has code 2 for excess contribution.

The questionnaire wizard for the form does not make sense. How do i enter this information for 2025 so that i do not pay excise tax on the $703? Also, is this distribution considered taxable income? If so, how do I enter the information so that it is taxable income but no excise tax being triggered? Note, that my wife is no longer covered under a high deductible health insurance plan as of 2023, 2024 and 2025. She is not employed. She still has an HSA.

ktramo17

I was in the phone with Turbotax for over 2 hours and no one had any idea on how to help me resolve this issue nor knew the answer. Here are some facts and general conclusions I am drawing that I need help with vetting. In 2022, I can see on my 1040 that the $703 excess was included as "Other Income" line 8 and I paid an additional 6% excise tax on the $703 for that year. In 2023 and 2024, I only paid 6% excise tax on $703 since it wasn't withdrawn.

My approach for 2025 is as followed: In tax year 2025, I did work with the HSA provider and the $703 was distributed out of the account so my thinking in the following in terms of how to handle this and make the software work. Form 8889 Part II line 14a and 14b will show the $703, form 5329 will no longer need to be included since the excess $703 was removed from the HSA via the 1099-SA and the $703 distribution is not included in "Other Income" for tax year 2025 because I paid incomes taxes on that amount back in 2022 as supported by my return. Does this approach make sense?