Long story short, wife made contributions to her HSA while I had an FSA. Only recently we found it this disqulifies her and any excess contributions made during the years the FSA exsisted are disqualifiying and subject to 6% excise tax penality (so I've read.) My understading is that I'll have to contact the HSA provider for excess of removal of those funds for each year, and ammend each of those tax returns correct? What complicates things is that there are years where my wife didn't contribute anything while FSA overlapped and also has a some money mixed it a previous year that are qualified contributions. Please see the break down and future questions below.
Honeslty just need to know what steps to take. What years im going to ammend and get dinged for.
Details (See table for breakdown):
- I've contributed to my employer's general purpose FSA from years 2022, 2023, 2024, and 2025
- My wife has contributed to her HSA during the same years
- She started her HSA on 2021. So this is not an overlap year
- 2022 and 2023 my wife contributed $0. I doubeld checked the W2s for those years and there was no ammount reported on box 12w. Balance did accrue slight interest throughout the year.
- 2024 and 2025 wife and her employer contributed the bulk of the balance
- There will be no FSA HSA overlap in 2026 and onward
Questions:
- Since the contributions for 2021 were NOT during an FSA/HSA overlap year and not considered excess, does this ammount still get a 6% excise tax penality for years 2022 and 2023?
- If the answer is no:
- Will 2022 and 2023 returns still need to be amended as there were no excess contributions made these years?
- Base on the table, contributions made in 2024 and 2025 will need an "excess contribution removal" correct?
- 2024 will be subject to 6% penallity as that's already been filed and will need amending?
- 2025 will not be subject to 6%c as it excess contributions for the year will be requested to removed correct?
- I should have the 2021 balance left in the account. once excess contributions are all removed
- I'll get dinged for Non-QME removing excess contributions.
- If yes:
- 22,23,24 all will get 6% penalty. All each year return will need to be ammended. 25 not subject to 6%. I should have the 2021 balance left in the account once excess contributions are all removed. I'll get dinged for Non-QME removing excess contributions.
Overlap years in red
| Year | Wife Contribution | Employer Contribution | Total Contributions | Ending Balance | Other Notes |
| 2025 | $1,667 | $1,500 | $3,167 | TBD | (so far this year) |
| 2024 | $2,000 | $1,500 | $3,500 | $6,197 | — |
| 2023 | — | — | $0 | $2,694 | — |
| 2022 | — | — | $0 | $2,693 | — |
| 2021 | $1,100 | — | $2,692 | $2,692 | $1,592 (transfer from previous HSA) |
