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Level 2
posted Feb 14, 2023 3:25:09 AM

How to deal with return of excess HSA contribution without updated W2

I maxed out my HSA contribution in 2022, but apparently due to a rounding error, the total contribution was 2 cents over the IRS limit.  When I entered my W2 info in TurboTax, it said I was being penalized over $450 for the excess contribution.  So I submitted a Request for Return of Excess Contributions form with my HSA and got a check for 2 cents sent to me.  But when I asked my employer about it, they said they would not give me a new W2 for a 2 cent difference on the Box 12 Amount.

What is the proper method for dealing with the return of excess contributions in TT without an updated W2?  Is there a form or worksheet in TT where I can account for this?  I don't want to change the W2 information and then get audited because it doesn't match the W2 on file with the IRS.

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1 Replies
Expert Alumni
Feb 14, 2023 5:11:32 AM

Yes, TurboTax allows you to correct your excess contribution so Form 8889 is configured correctly.  

 

Please see the following instructions posted by Expert RalphH1:

  1. 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…) 
  2. 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).
  3. 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!). 
  4. 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).