I made an excess HSA contribution for 4,850, which also earned 910 during 2023. The entire contribution was excess because I found out later that I did not have a qualifying HDHP plan the entire year. I have already filed my original 2023 tax return which reflected the 4,850 as a deduction on Schedule 1, Part II. I have also received the total excess contribution plus earnings of 5,760 back from my HSA custodian in 2024 subsequent to filing my 2023 tax return. Now I plan on filing an amended return for 2023 to reverse the impact of all this under section 301.9100-2 of the IRC. I also understand under this IRC section that I should not owe any additional tax penalty (other than the normal income taxes due to reversing the 4,850 deduction).
In going through the turbotax questions for the amended return, I have figured out how to reverse the 4,850 contribution. Question - Do I also need to report the 910 of earnings on the 2023 amended return or should I wait until I file my 2024 return since that money was received by me in 2024? If I need to include on the 2023 amended return, how exactly do I input it into Turbotax and where will it be reported on my 1040-X?
the earnings are reported as other income on the tax return for the year of withdrawal. so in your case 2024.
You'll receive a code-2 2024 Form 1099-SA that shows the gross distribution of $5,760 in box 1 and and $910 in box 2 as taxable. Entering this form into 2024 TurboTax will cause TurboTax to report it appropriately as taxable income.
Thanks for the helpful input. So just to recap:
a- I file an amended return for 2023 which will reverse the excess contribution of $4,850 and I will of course owe taxes on that.
b- when I file my 2024 return the $910 will be reported as income when I enter my 1099-SA
Last question—when I enter the 1099-SA for the 2024 return is there any risk the $4,850 will also show up as income? If so, that would not make sense since I will have already filed the 2023 amended return to undo the $4,850. Thoughts?
The $4,850 will be included in box 1 along with the $910, but only the $910 will appear in box 2 as the taxable amount. Only the taxable amount will appear on your filed 2024 tax return.
the earnings are reported as other income on the tax return for the year of withdrawal. so in your case 2024.
You'll receive a code-2 2024 Form 1099-SA that shows the gross distribution of $5,760 in box 1 and and $910 in box 2 as taxable. Entering this form into 2024 TurboTax will cause TurboTax to report it appropriately as taxable income.
Thanks for the helpful input. So just to recap:
a- I file an amended return for 2023 which will reverse the excess contribution of $4,850 and I will of course owe taxes on that.
b- when I file my 2024 return the $910 will be reported as income when I enter my 1099-SA
Last question—when I enter the 1099-SA for the 2024 return is there any risk the $4,850 will also show up as income? If so, that would not make sense since I will have already filed the 2023 amended return to undo the $4,850. Thoughts?
The $4,850 will be included in box 1 along with the $910, but only the $910 will appear in box 2 as the taxable amount. Only the taxable amount will appear on your filed 2024 tax return.