How do I divide Total HSA withdrawals for 2023 Excesses between employer and employee?

[Taxesarefun3]

I am doing my 2023 taxes and I know how much I actually withdrew from my HSA from January 2024 to April 15, 2024.

Prior year excess contributions.                              $X,XXX

Excess employer and payroll contributions           $X,XXX

Amount withdrawn by April 15, 2024                         ?

Excess personal contributions                                 $X,XXX

Amount withdrawn by April 15, 2024                         ?

What amounts do I put for each “Amount withdrawn by April 15, 2024”? Do I just divide evenly and put equal numbers in each section? Does it matter how I divide the total withdrawn? Can someone help me with these questions?

[Taxesarefun3]

I did not make any withdrawal requests to the HSA provider. I just added the withdraws we did for medical expenses from January 2024 to April 15, 2024.

[MindyB]

The amount withdrawn is referring to specific requests you made to your HSA provider to return excess contributions.  If you only withdrew amounts for regular medical expenses, "Amount withdrawn by April 15, 2024" is Zero. Often, the full amount would go on the line for "excess employer and payroll contributions" unless you contributed to your HSA directly, not through your paycheck. If you did both, you can choose how to allocate them. 

To be clear, most people are preparing their 2024 taxes, but your question is regarding 2023 taxes. ‌If that is an error and you meant 2024, you still have a chance to withdraw any excess contributions and avoid a 6% penalty.  If you are preparing 2023 now, and you have an excess contribution, there's likely a 6% excise tax on the excess contributions.  See IRS Publication 969 for more information on the excise tax.  

[Taxesarefun3]

Thanks @MindyB ,

Would I enter Zero for "Amount withdrawn by April 15, 2024"  or just choose "No, we're not going to make this withdraw"?

[Taxesarefun3]

No mistake. I am doing 2023.

[MindyB]

You can choose "No, we're not going to make this withdrawal."

[Taxesarefun3]

Thnaks @MindyB ,

Another quick question,

I originally entered some numbers for “Amount withdrawn by April 15, 2024” and my tax owed amount decreased. But when I select "No, we're not going to make this withdrawal.", and continue, the tax owed does not increase back to the amount before I entered some numbers for “Amount withdrawn by April 15, 2024”. How do I get the original tax owed that will reflect that "No, we're not going to make this withdrawal."?

[MindyB]

I would suggest printing the tax forms to pdf and reviewing them. You will want to ensure that on Form 5329, the excess amount is appearing in Part VII on page 2.  You could also test that the "No, we're not going to make this withdrawal" is computing your tax properly by changing the answer of a partial repayment to zero or $1.  The tax impact should be the same. 

If the software seems "stuck" you can always just delete the HSA entry and re-do that, rather than recreate your entire return.