Excess ROTH & Excess HSA contribution 2024

[1dragonlady1]

Need Help with 2 questions for 2025 tax return: 

Question 1, Excess Roth Contribution in 2024:

2024 $8,000 Excess ROTH contribution removed on 2/19/2025 BEFORE I filed the 2024 tax returns.  I created a 1099-R for the excess Roth contribution removal (Box1, gross distribution $8,461.45, $461.45 NIA in box 2a Taxable amount, entered codes J & P in box 7).   In the Wages & Income screen of Turbo Tax I typed the explanation "Corrective distributions made before the due date of the return".   On the Form 1040 Line 4a: $8,461.45 gross distribution, line 4b: $461.45 taxable.  I filed the tax return on 3/24/2025.

Received the 2025 Form1099-R last week, it has the same identical information as the 1099-R I created on 3/24/2025 when I filed the tax return:  Box1, gross distribution $8,461.45,  $461.45 NIA (box 2a Taxable amount), codes J & P in box 7.

Should I disregard this 2025 1099R?

Question 2, Excess HSA contribution in 2024:

Fell into the Medicare trap that wasn't discovered until May 2025 (after I filed the 2024 taxes).  I contributed $4,660 for all 12 months in 2024 only to find out that I was not eligible to contribute in November & December 2024 because I filed for Medicare to start on 8/1/2025.  $777 excess HSA contribution + 19 cents earnings were removed 5/23/2025 by Health Equity.  I filed Amended tax return in June 2025 with a heading "Filed Pursuant to Section 301.9100-2" on the front page of Form 1040-X and paid the additional tax attributed to the $777 income (IRS had extended the tax filing deadline to North Carolina residents affected by Hurricane Helene so there was no penalty for late filing).  I had to manually entered $777 on the Form 8889 smart worksheet to make the numbers work on that form.

I MAILED the Amended tax return + the check for additional tax in June 2025 to the IRS because Turbo Tax couldn't file it electronically probably due to the manually entered Form 8889.  The IRS accepted and completed my Amended Tax Return on 9/15/2025.  

I just received two 2025 Form 1099-SAs from Health Equity:

1st 1099-SA is for normal distribution $600 medical expenses reimbursement in 2025, distribution code 1 in box 3

2nd 1099-SA is for the $777.19 gross distribution (box1), 19 cents in box 2 Earnings on Excess Contribution,  Distribution code 2 in box 3

Should I disregard the 2nd 1099-SA that shows $777.19?

I haven't entered data into Turbo Tax, waiting for W-2 and the rest of 1099s.  I did upload the Amended Tax Return, not sure if Turbo Tax will know I had already paid the taxes incurred on the additional $777.19 withdrawal from the HSA.   

Will the IRS know to disregard the 1099-R ($8,461.45) and the 1099-SA ($777.19)? 

It was a challenge to do the Amended Tax Return but I somehow did it scouring advices from this forum.   I just need to get with the 2025 tax return as my future tax returns are much simpler. 

Thanks for your help in advance.

[AmyC]

Let's go through each question and step.

Excess ROTH and 1099-R. You did a great job entering it last year. You do not disregard the 1099-R.

1. enter the 1099-R you received just as it is. The code P tells the IRS and the program, that it was for a prior year
2. exempt the income by answering the follow up question - Did you already report this? or maybe Is this for 2025? You have already reported the income and it is not for 2025.
3. you may have federal and state tax withheld on the form which applies to this year. TY 2025.

Excess HSA. You need to report all forms:

1. enter the first 1099-SA forms. The first is a normal code 1 that you used on medical expenses so it will zero out.
2. enter the second 1099-SA form exactly as written with code 2 in box 3. When TurboTax asks Did you pay for anything with this distribution or Was this a withdrawal of excess contributions? Select Yes.
3. Next, the program will ask Did you already report this?, select yes.
4. This registers your 1099-R and disregards the income for TY25. Your box 2 earnings are insignificant but technically, you earned them in 2025 with the distribution.
5. When you start 2025, the program will ask about overfunded HSA in 2024, answer no since you have corrected the situation.

Amended return: 

 If you paid additional state tax, you will want to add that in as taxes paid in 2025.

1. In the federal section, go to Estimates and Others Taxes Paid
2. Select Income Taxes
3. Enter state and local taxes paid from the amended returns.

If you live in AL, OR, IA, MO or LA, federal taxes paid may be deductible on your state return. You can add federal taxes paid for the amended return in the same income tax location.

The IRS is aware of the forms, codes, and what you have done.

Uploading the amended tax return is just a pdf. The program only knows what you enter. You are only entering what is relevant to your 2025 tax return.

Final steps:

Review your forms.

1. Your 1099-R may show on line 4a but will not be included on line 4b.
2. Your 8889 line 16 will be zero for the HSA.

[1dragonlady1]

I entered the 1099-SA for the $777.19 distribution (Excess HSA contribution removal) onto Turbo Tax with Distribution code 2.  

The next screen says "Tell us if your excess HSA/MSA contribution was made by your employer and deducted from the wages in box 1 of your W-2".

I made all 12 months HSA contribution via payroll deduction to Health Equity in 2024, removed the $777 excess contribution on 5/23/2025 from Health Equity.

Should my answer be NO since the excess HSA contribution was not deducted from wages in box 1 of my W-2 because I removed it from my HSA account at Health Equity?

Turbo Tax didn't ask  “Did you pay for anything with this distribution or Was this a withdrawal of excess contributions?”  or  ask Did you already report this?

What should I do?

[BillM223]

Please let me clarify - when you amended your return, did you remove the $777 in contributions so that TurboTax did not realize that there were excess contributions? (because with your new numbers, they was no excess).

If so, I would not enter the 1099-SA. I would save it with your tax papers along with an explanation of why you did what you did, i.e., that the amended return removed the excess, so no excess, no adding HSA contributions back to income, and no need for a 1099-SA.

This means that you no longer have to deal with the question, "Tell us if your excess HSA/MSA contribution was made by your employer and deducted from the wages in box 1 of your W-2", which is good because you have no right answer with your new return.

If you fail to enter a form that you were sent (remember, the IRS gets copies of all these forms), the IRS may get curious as to why you did not include it with your return. You did not enter it because it no longer made sense on your amended return. This is what you need to document.

If you did NOT remove the $777 in HSA contributions in the amended return, then come back and tell us this. 

[1dragonlady1]

Thank you for the quick response. 

I did remove the $777 excess HSA contribution + 19 cents earning from Health Equity in May 2025.  I filed Amended tax return (by mail) in June 2025 with a heading "Filed Pursuant to Section 301.9100-2" on the front page of Form 1040-X and paid the additional tax ($186) attributed to the $777 income .   I had to manually entered $777 on the Form 8889 smart worksheet to make the numbers work on that form.
I MAILED the Amended tax return + the $186 check for the additional tax in June 2025 to the IRS because Turbo Tax couldn't file it electronically probably due to the manually entered Form 8889. The IRS cashed the check within 2 weeks, I received a letter dated 9/15/2025 stating that "We made the changes you requested to your 2024 Form 1040-SR to adjust your other income.  As a result you don't owe us any money, nor are you due a refund".  I logged onto the IRS website and checked my account and found that my 1040X was accepted and completed.

Therefore, I will disregard the 1099-SA that has the $777.19 distribution, code 2.

Should I disregard the 1099-R that shows the $8,461.45 Excess ROTH contribution removal, distribution  codes J & P because that was accounted for when I e-filed my tax return on 3/24/2025?  I haven't done anything yet regarding this 1099-R because I am waiting for 1099s from my other brokerage accounts.

[BillM223]

Do I understand you to say that you created and entered a ghost 1099-R for the excess Roth contribution removal in anticipation of the 1099-R that the Roth administrator was going to send you? Did you do that only because you did not want to wait for the administrator to send you the 1099-R?

Fortunately, since the 1099-R that you just received exactly matches the data on the ghost 1099-R, you can pretend that your ghost 1099-R came from the Roth administrator, and just ignore the "real" one.

[1dragonlady1]

Thanks again for the quick response.

Yes, I created the "ghost" 1099-R for the Excess ROTH contribution removal when I e-filed the original tax return in March 2025 with distribution codes J & P.

I therefore will disregard the 1099-R that I received 2 weeks ago as the numbers are identical to the 1099-R I created in March 2025.