Need help to report excess HSA contribution from 2023 which was adjusted in 2024's total contribution.

[ADTK]

I had excess contribution to my HSA account by mistake of $25 in 2023, I got it corrected before 15th April 2024 where they helped me adjust it to be as a part of HSA contribution for the year 2024. Therefore, I contributed $25 less in 2024 through my Payroll. I have received 1099-SA.

1099-SA for 2024 tax form:

1.Gross distribution : 25.59

2.Earnings on excess contribution :0.59

3. Distribution code : 2

Through my employer payroll :

HSA contribution in 2023 : $3875.00

HSA contribution in 2024 : $ 4125.00

Can someone please help me clarify the understanding of how to report this in 2024 taxes?

[BillM223]

1. You will enter the 1099-SA into TurboTax in the HSA interview (Deductions & Credits->Medical->1099-SA, MSA, HSA). Because the distribution code is "2", the amount in box 1 will be ignored (this is because the excess was added back to income in your 2023 return); the box 2 amount (earnings) will be added to Income, as it should be.

2. You don't make any change or amendment to your 2023 return, after all, what your employer did was correct.

3. You enter your 2024 W-2 as reported (I assume that the code W amount in box 12 of your W-2 is 4,125).

4. Because you reduced your HSA contributions by $25, you left room for TurboTax to apply the $25 carryover as a "personal" contribution (lines 2, form 8889) for 2024. This will "use up" the carryover, and so the matter will be done with.

5. Please do not try to go into Forms mode (if you have the CD/download version of TurboTax), and make changes yourself - let TurboTax handle it. It sounds like the entire issue will become moot with your 2024 return.

[ADTK]

Thanks @BillM223 !! This makes sense!

Yes, in 2024 W2, for HSA I have $4125.00 mentioned  in box 12, code W)

I am using TurboTax online , so I should enter $25 amount as my "personal contributions" box in HSA contribution section - is that correct?

So just to confirm,

This will make my total contribution of $4150, i.e. $4125 from employer in W2 and $25 from personal contributions for 2024 and it will fix everything, is that correct understanding? Thanks in advance!

[BillM223]

"so I should enter $25 amount as my "personal contributions" box in HSA contribution section - is that correct?"

No, TurboTax will do that for you. TurboTax will put that $25 on line 2 of the 8889 - you don't have to do anything. 

"This will make my total contribution of $4150, i.e. $4125 from employer in W2 and $25 from personal contributions for 2024 and it will fix everything, is that correct understanding?"

Yes, this should eliminate the carryover of the excess and put it to bed.

[ADTK]

@BillM223  Thanks a lot!