How to file HSA excess contribution with form 1099-SA

[PeterB-2022]

Hi all,

I over contributed $1250 to my HSA in year 2022, I realized that and corrected it by withdrawing this amount on 04/19/2023 (one day right after tax deadline of 04/18/2022, prior that I had already requested the tax extension to 10/16/2023).  All my HSA fund were kept in a savings/cash account (no investments).

Can someone help me understand:

(1).  After I extended the deadline to 10/16/2023 and withdraw the extra amount, am I still facing any penalty for over contribution?

(2).  I already filed to IRS of that extra $1250 as my other income for tax year 2022, what to do with the form 1099-SA I received afterwards, should I just skip or fill in all the information into Turbotax to pay tax possibly twice?

[BillM223 · Accepted solution]

No, once you extended your return, you had until October 15 to withdraw the excess, although you might have to fight the HSA custodian a bit about the withdrawal being after April 15th.

"I already filed to IRS of that extra $1250 as my other income for tax year 2022" - Are you saying that you manually adjusted your 2022 return to add back that $1,250? The moment that the excess was discovered by TurboTax, TurboTax added the excess back to Other Income, assuming that the excess was from the code W amount in box 12 of your W-2.

"what to do with the form 1099-SA I received afterwards, should I just skip or fill in all the information into Turbotax to pay tax possibly twice?" - Does this 1099-SA have a code of 2 in box 3? If so, only the earnings in box 2 are added to your income; the amount of excess in box 1 is ignored, because TurboTax knows that the excess was already handled.

Does this cover your situation?

[PeterB-2022]

Thanks Bill, 

Yes,  TurboTax added the $1,250 excess back to Other Income, and you are right, the excess was from the code W amount in box 12 of one of my W-2

Also, you are right, my 1099-SA have a code of 2 in box 3.

Thanks for your answer, that solved my question.