How to manage excess HSA contribution in 2024 that was rolled over into 2025 contributions

[michaelbarry06]

Background: My wife and I individually contributed to our HSA's (self-only limit) for a few years until mid-2024. We had a child, I stopped contributing, and my wife increased her contributions, to an amount we believed to be the "family max" HSA contribution limit. We were notified of an excess HSA Contribution of approximately $328 when filing 2024 taxes. I remember calling my HSA to confirm this excess, and I believe I chose the option in TurboTax to rollover the excess into my 2025 HSA contributions. (I do not recall doing any paperwork nor was I made aware of any required paperwork with my HSA to confirm this decision). My wife (the sole HSA contributor) intentionally decreased her HSA contributions in 2025 so as not to once again exceed the family maximum. 

On this year's HSA tax form 1099-SA, box1 "gross distributions" show $328. Box 3 shows code 2, telling me Box 1 is from an "excess contribution". 

A large part of my confusion may be from misunderstanding the language of tax forms, and by what TT is asking me. But I'm wondering if this 1099-SA is indicating I didn't manage my excess contribution from 2024 in TT correctly, or I didn't manage it correctly with my HSA, or am I on the right track and if so, what would be the correct way to complete the TurboTax HSA questionnaire so I correctly settle this with the IRS and not see it again next year? 

[michaelbarry06]

More detail that may be helpful:

2024 total HSA contributions (self): $2,103.85

2024 total HSA contributions (spouse): $6,523.85

Total contributions 2024: $8,627.70 (exceeding $8,300 max by $328)

2025 total HSA contributions (family): $8,288.29 (from HSA form 5498-SA)

2025 W-2 Box 12, code W = $7,960.20

Difference between these two being $328

It appears that my employer contribution ($7,960) was deducted from my wages, box 1, in my W-2. Therefore, my total 2025 contributions of $8,288 accounts for that made during 2025 by me, my employer, and includes the carry over that was excess in 2024. This number is not exceeding the 2025 family max of $8,550.

So with this year's filing, when turbotax asks me "Did [spouse] have excess contributions deducted from their wages? (Tell us if your excess HSA contributions was made by your employer and decuted from the wages in box 1 of your W-2)"...my answer should be "no" since Box 12 code W was not $8,288. 

Is this correct? If so, it makes the $328 show as wages in turbotax under HSA. Will this take care of this 2024 overcontribution once and for all or is there something else I should be doing?

[BillM223]

"I remember calling my HSA to confirm this excess," - your HSA custodian actually has no way to know if you made excess contributions because they don't have all the information that TurboTax has. All they can tell you is the maximum for any given HDHP class.

"I do not recall doing any paperwork nor was I made aware of any required paperwork with my HSA to confirm this decision" - correct. Once the money is in your HSA, the handling of any excess is a paperwork issue that is on your tax return. You did not have to report this to the HSA custodian.

The 1099-SA for the amount of $328 was triggered by your request to withdraw the excess HSA contributions from 2024, which means that you did NOT "carry over" the excess to 2025, despite what you remember. If you requested this withdrawal prior to April 16, 2025, then you "cured" this excess, so there is no impact on your 2025 return. NOTE, if you requested this withdrawal after this date, then the excess carried over to 2025 anyway, and you need to contact the HSA custodian and report a "Mistaken Distribution", i.e., you should not have withdrawn it. However, the odds are good that the HSA custodian will decline to do it because this was "last year" (be nice when you ask, because they don't have to accept the request).

If there was an excess (yet to be determined) carried over from 2024 to 2025, you correctly reduced your HSA contributions for 2025. 

"my answer should be "no" since Box 12 code W was not $8,288. " - No, you should answer "no" because (1) you don't even know if you had an excess in 2025 (TurboTax should not ask you this question until it tells you that you have an excess, which I assume it hasn't yet for 2025), and besides, if there really was a carryover of excess contributions (to be determined), it would have been applied as a "personal" contribution, not "employer" contributions. But please tell me what is reported word for word on the HSA Summary when you say, "makes the $328 show as wages in turbotax under HSA".

So, please come back and let me know when (the date) you requested this withdrawal of excess HSA contributions, and we will work from here.

[dmertz]

I responded to michaelbarry06's similar question with this:

"HSA says my total contributions for 2025 is $8,288."

What happened is that you received a distribution of $328 as a return of the excess contribution and you deposited that $328 back into the HSA as a personal (not through your employer) 2025 contribution.  That combined with the $7,960 contributed via your employer in 2025 makes your total contributions for 2025 be $8,288.

[Opus 17]

@michaelbarry06 

Very briefly, it appears that you did in fact request a return of the excess contribution.  What is needed now is to clear up the 2024 return first so we can know how to go forward with 2025.

1. On your 2024 return, do you have a penalty on form 5329?

2. When did you request the return of excess (before or After April 15, 2025)?

3. Did the return of excess contain any interest or earnings?  Was that interest or earnings reported as taxable income on your 2024 return?

[michaelbarry06]

I'll try to address each member's question(s):

@Opus 17 : 

>1. On your 2024 return, do you have a penalty on form 5329?

I've searched my 2024 W-2, and there's  no record of form 5329 (i used the document search tool and cannot find it). If it's any help, the value of $328 appears in a few places on my W-2: ("additional income from schedule 1, line 10" and "income from form 8889"

>2. When did you request the return of excess (before or After April 15, 2025)?

We filed an extension for 2024 taxes, and finally submitted them in August 2025. Again, I believed that I was confirming with turbotax how I wanted to handle my excess contribution from 2024, and told it to re-distribute the $328 into 2025 HSA contributions. I didn't think I was asking for a "return of excess". Am I misunderstanding your question? As a reminder, I never filled out any forms with my HSA, i.e. form for "distribution of excess HSA contribution form". I talked to my HSA recently, and their odd reply was this form was not necessary to fill out.

>3. Did the return of excess contain any interest or earnings?  Was that interest or earnings reported as taxable income on your 2024 return?

I believe my response to Question 1 may pertain to this. But if of help, my wife's 1099-SA for 2025 shows box 1 "Gross distributions" shows $328.09, and box 2 "earnings on excess contributions" shows $0.09

@dmertz 

>What happened is that you received a distribution of $328 as a return of the excess contribution and you deposited that $328 back into the HSA as a personal (not through your employer) 2025 contribution

Are we using different language but saying the same thing? Is this essentially taking the excess from 2024 and contributing it to 2025? I thought that's what I told turbotax to do, and you're suggesting that I did it correctly? (Again, odd that I'm finding a form from my HSA custodian that suggests I should have completed section "how would you like the excess funds distributed? check one... "option 1 - change tax year to:______ (contribution will count toward your yearly contribution maximum". I did NOT complete this form and let my HSA know.)

@BillM223 

>No, you should answer "no" because (1) you don't even know if you had an excess in 2025

To clarify, I know I had an excess in 2024 that I'm trying to figure out. I do not believe, based on all documents from my HSA, that I have exceeded the max contribution limit for 2025.

>please tell me what is reported word for word on the HSA Summary when you say, "makes the $328 show as wages in turbotax under HSA".

I'm just referring to the summary page of my "wages and income", for my HSA entry, its saying income is $328. same summary page that lists all my other sources of income (my job, investments, etc.)

>So, please come back and let me know when (the date) you requested this withdrawal of excess HSA contributions, and we will work from here.

This seems to imply you believe I requested withdrawal of excess contributions (from TurboTax and/or my HSA custodian). I have done neither. Would the fact I do not have a form 5329 on my W-2 confirm this?

[Opus 17]

Did you actually get cash from the HSA?

It sounds like the HSA did take the excess contribution out as a "return of excess contribution."  If they applied it as a contribution to 2025 instead of sending you as a check, that is a new twist to me.  But it is fundamentally different operation than leaving the money in the account to carry over to the next year.

If you left the money in the account to carry forward and apply to the next year, you would tell the HSA bank nothing.  The carry-forward is managed on form 8889 and 5329 and is between you and the IRS only.  The HSA bank doesn't need to know or care.  

You also seem to have filed correctly, but possibly by accident.  If you told Turbotax to leave the excess in the account for 2024, your 2024 return would have the $328 excess contribution on form 5329 and a 6% penalty of $19.68.  Since you have no form 5329, then you must have told Turbotax you would remove the excess contribution, even if that's not what you intended to do.  The last thing to check is that the removed excess of $328 should have been reported on schedule 1, line 8f.  (I will guess it is there, because you must either have a penalty on form 5329 or an amount on line 8f, one or the other.  It can't be neither.)

If you don't have an amount on line 8f, then you probably need your return analyzed by someone in person.

Assuming the excess is reported as income on line 8f, then no changes are needed to your 2024 tax return.  You removed the excess contribution before the extended deadline of October 15.  You are supposed to report the attributed interest as taxable income on your 2024 return, but since it was only 9 cents, you don't need to amend your 2024 return to include this income.

For 2025, if the bank never sent you a check for the $328, then they deposited it back into the account as a contribution. (You may want to check your statements to make sure.)  So you would report this as an extra contribution (not from a W-2) in that amount, and it would be tax deductible.

[michaelbarry06]

Maybe info from my 2025 end of year HSA statement would be helpful to share?

2025 Total contributions:

- by your employer or by you via salary reduction: $7,960.20

-by you directly to [HSA custodian]: $328.09

-Excess contribution withdrawn for tax year 2025: $328.09

2024 Contribution made during 2025: $0

2025 Distributions and interest:

-distributions: $328.09

-fees charged: $60.32

-interest earned: $1.98 @Opus 17 

2025 Contributions made during 2025 (from above): $8,288.29

In addition, after attempting to re-enter my HSA info under "wages and income", I'm wondering if I should have entered $328, not $0, when asked value of "contributions [my spouse] personally made (not through your employer". It now makes sense that the $328 excess from 2024 could be seen as a "personal" contribution for 2025. Trying to show screen shots of my *new* selections, which takes me down a very different path on TT, but unable to upload photos at the moment

[BillM223]

*** I was typing my answer below when I see that Opus also answered, saying much the same as I did. So except for my observation about not taking the Wages and Income Summary too seriously (it's NOT a tax form, and it didn't mean what you thought it did), I am going to stand aside and let Opus and maybe dmertz finish this. 

***

"I'm just referring to the summary page of my "wages and income", for my HSA entry, its saying income is $328."

Ah, the Summary page for wages and income is NOT a tax page (believe me, this causes no end of confusion), so we have to take its statements with a large grain of salt.

In this case, the logic of calling the $328 "income" is because under certain circumstances, the distribution might be taxable. By your stating that it is "income" led me at least to believe that it was appearing on your tax return itself (probably line 8f on Schedule 1 (1040)).

When I said, "HSA Summary" page, I meant the page at the end of the HSA interview, just before you return either to "Wages and Income" or "Deductions & Credits".

***

[dmertz]

"I did NOT complete this form and let my HSA know.)"

Still, it seems that that is what they did based on the amount that they report as having been contributed for 2025.  If the $328 did not become part of your 2025 contribution, where did the $328 of cash go and why does the HSA claim that $8,288 was contributed for 2025?

" I believe I chose the option in TurboTax to rollover the excess into my 2025 HSA contributions."

I think you mean that you told 2025 TurboTax to treat $328 of excess contribution carried over from 2024 as part of your 2025 HSA contribution.  However, because you receives a return of that excess by the due date of your 2024 tax return, including extensions, there was no excess contribution to be carried from 2024 into 2025.  Perhaps when preparing your on your 2024 tax return you failed to tell TurboTax that you had the excess returned and TurboTax prepared your 2024 tax return as if no return of the excess contribution was done, or when 2025 TurboTax asked you told TurboTax that you did have an excess carried over from 2025.  Remember, what they did was essentially return $328 in case to you, which you then gave back to them to deposit as a 2025 contribution, so the net result was that there was no excess 2024 contribution.

If all of the 2024 contribution was made through your employer, your 2024 tax return should have shown $328 of taxable income on Schedule 1 line 8f.

[michaelbarry06]

@Opus 17  my last reply, made just after your reply, may be helpful to review for additional info. To answer your questions.

Did you actually get cash from the HSA?

No, I did not receive cash or checks from my HSA after filing 2024 taxes.

 The last thing to check is that the removed excess of $328 should have been reported on schedule 1, line 8f. 

Correct, on my 2024 tax return, schedule 1, line 8f: Income from form 8889 = $328

For 2025, if the bank never sent you a check for the $328, then they deposited it back into the account as a contribution. (You may want to check your statements to make sure.)  So you would report this as an extra contribution (not from a W-2) in that amount, and it would be tax deductible.

I believe this is where I may have gone wrong in the TT questionnaire. In the screen that reads, "Let's enter [spouses] HSA contributions (don't include contributions from cafeteria plans, etc." ...

For field entry "2025 employer and payroll contributions (box 12 of W-2)" I entered $7,960. ...straighforward

But for field entry "Contributions [spouse] personally made (not through your employer)" I originally entered $0. What I should have entered is $328.09. If I do, this triggers new questions to get more info, such as "do any of these situations apply? ..."[spouse] overfunded their HSA last year. IS THIS ASKING IF WE OVERFUNDED FOR 2024 TAX YEAR OR 2025? If 2024, then yes, we did, and more details are wanted, like total value of HSA at end of 2025, and value of contributions made in early 2026.

[Opus 17]

@michaelbarry06 

You did not overfund your 2024 HSA because you removed the excess contributions in a timely manner (before the extended deadline.)

[dmertz]

"But for field entry "Contributions [spouse] personally made (not through your employer)" ... I should have entered is $328.09."

Correct.

""do any of these situations apply? ..."[spouse] overfunded their HSA last year. "

As Opus 17 said, she did not overfund her HSA in 2024 because the excess was resolved with the return of excess contribution.  2025 TurboTax is asking about the net result for 2024, not the intermediate result where the excess had not yet been returned.

[michaelbarry06]

@BillM223 thank you for clarifying. And you are correct: schedule 1, line 8f has a value of $328.

I found the HSA summary page you are referring to:

Deduction: $328

Total distributions: $328

Taxable distributions: $0

Taxable earnings on excess distributions: $0

Tax-free company contributions: $7,960

Excess company contributions withdrawn: $0

@Opus 17 thanks for confirming. your and @dmertz replies are helpfing me understand what TurboTax is trying to ask with each question. 

Hopefully my LAST question: When asked "did [spouse] have excess contributions deducted from their wages?", I believe the answer is "No." ....because her 2025 W-2, line 12, code W is $7,960. 

If code W was $8,288 (the sum of $328 (excess from 2024 "contributed directly by me) + $7,960 (2025 total contributions by your employer or by me via salary reduction) then YES, [my spouse] did have excess contributions deducted from their wages.

Is this correct?

[Opus 17]

@michaelbarry06 

The answer there is no.  (I don't quite understand why that question is asked.)

The 2025 salary deferral is whatever your spouse agreed to with her employer for 2025.  It would never include prior amounts.