Excess HSA contribution due to Medicare lookback trap

1dragonlady1 · May 20, 2025 8:09:18 PM

I contributed $4,660 to my Health Savings account in 2024 through my employer (pre-tax payroll deduction) all 12 months in 2024. I plan on retiring on 8/1/2025 so I have not contributed to HSA since January 1, 2025.I applied for Medicare part A & B on 5/1/2025 for these benefits to be effective 8/1/2025 (I have employer sponsored high deductible medical insurance). I was shocked to receive my Medicare card showing part A benefit effective 11/1/2024, part B benefit effective 8/1/2025. This really threw me off as I didn't realized that Medicare part A is backdated 6 months from the date that I submit my application for part A and B. Does it mean that I was only eligible to contribute to HSA for 5 months in 2024and must remove 7 months of HSA contribution + earnings to avoid the 6% penalty? $4,660 divided by 12 months x 7 months = $2,718.33 + earnings. How do I calculate earnings on $2,718.33? I have $3,600 cash + $50k investments in the HSA (Health Equity). Health Equity's Excess Contribution Removal form does not have a place to show earning attributed to the excess contribution so I need to calculate it myself. Do I need to contact my employer so they can correct my 2024 W-2 or do I only need to contact Health Equity? Will Health Equity issue some type of tax form for the excess contribution removal this year or next year? I have already filed my 2024 Federal and North Carolina taxes. I understand that I can amended both the Federal and North Carolina tax return due to hurricane Helene. Can Turbo Tax do Amended return for both Federal and North Carolina? Please show me what to do in Turbo tax regarding this excess HSA contribution removal. Greatly appreciated your help and input. Thanks,Vicki

I somehow got the $777 excess HSA contribution that was removed to show on Schedule 1 and the number flows into 1040X, thus increasing my taxable income by $777. Because the amount Turbo Tax thinks is excess ($368) is not the amount I withdrew ($777) so I can't file the amended tax return electronically.

On the 1040X Special Situations Smart Worksheet: Should I check the box "Filing pursuant to section 301.9100-2" and thus allowing me to print "2024 excess HSA contribution ($777) removed 5/2/32025"?

I am not sure if I need to check any of the boxes (there are 7).

The 2024 tax filing deadline is 9/15/2025.

Please advise. Thanks again for your patience.