2022 HSA excess withdrawal

[koswami]

My spouse and I had changed jobs during 2022 and we ended up with an excess contribution in our HSAs. We fixed this with calling Fidelity and they gave us a check with the overrage.

When we enter our W2s, I see the excess penalty added to my amount due. Do we need to request a correct W2 form?

Also, how would we do this if for my spouse,  the employer now is different than the one where the excess happened.

[RalphH1 · Accepted solution]

If you’ve corrected the excess HSA contribution, then you do not need to jump through the hoops of having the W-2 corrected (thankfully!). You just need the Form 8889 configured correctly, which the TurboTax program will do once you give it the scoop on all of this.

If you haven’t already been to “1099-SA, HSA, MSA” in the Deductions & Credits section, you’ll need to go there. (And if you have, you’ll need to return there, since it’s still showing your tax and penalty…) After you go through the 1099-SA sections (which is relevant if money also came out of the account in 2022), you’ll then see the questions clarifying your allowed contribution for the year (see this TurboTax discussion).

Especially important is a page which says, “You may want to withdraw money from your HSA.” It should give you the exact amount of the excess contribution, and allow you to check “I’ll withdraw the full [$X.XX] excess contribution by April 18, 2023” (which is of course true in this case, since you’ve already done it!). The program will then reassure you that it’s removing the extra tax (which you can verify in Part I of Form 8889, when you’re able to view that).

Here's what that TurboTax screen looks like, @koswami:

[koswami]

Thank you @RalphH1