HSA Excess Contributions in 2021 - Received 2022 1099-SA

[phongdtran94]

In 2021, I made an excess contribution of $977 to my HSA. I filed my taxes and listed the $977 as "Other Income" in Schedule 1 line 8e ("Taxable Health Savings Account Distribution"). After filing the taxes, I withdrew the $977 from my HSA as an "Excess Contribution Refund". This was completed after April 18, 2022. I also did not file form 5329 in 2021 since I reported the $977 as other income.

I received a 1099-SA for calendar year 2022, with a gross distribution of $977 and a distribution code of 2. Since I reported this as other income in 2021, how should I report this 1099-SA in my 2022 tax return? 

[BillM223]

Go ahead and enter the 1099-SA in your 2022 return. The dist code of '2' will prevent the box 1 amount from being added to your 2022 return (because the excess was already taxed as you note in 2021).

The earnings amount in box 2 will be added to Other Income in your 2022 return. Now you are done with the excess.

[phongdtran94]

Thanks @BillM223 ! One question - I'm asked what amount of contributions were excess in 2021 from Form 5329. However, I did not file this last year and only included the $977 as other income. Is it ok to put $0 in this box? 

[BillM223]

That question about "Did you overfund your HSA in 2021?" actually wants to know "Did you carry over any excess from 2021?" (yes, it is not obvious)

Since you withdrew the whole excess in 2021 and so had no carryover, you just answer NO. (i.e., not yes with a zero, but NO so you never see the second screen).

[phongdtran94]

Ahh, I see! Thank you for the detailed response Bill. I appreciate it!