I have been using and taking the maximum on Healthcare Savings Accounts for the last few years. This year (2020 Tax Year) working with Turbotax it identified from last year where I paid a penalty for excess contributions to my HSA. I knew I paid a penalty but when it said "tax" on the form I thought I was just paying income tax, I didn't realize that it was an excise tax that kept repeating.
At first I thought I had over contributed for the last two tax years. Figuring this out was complicated by moving HSA custodians due to a merger. I chased that red herring trying to get corrective paperwork out of both current and former custodian. That's probably the subject of a different help request if someone needs it.
What I finally chased my "over contribution" to was a mistake on my 2017 form 8889. I was a couple of years past 55 at that time but I did not enter $1000 in line 7 as entitled at that time. I had however contributed that amount. Thus in 2017 my returns started paying this penalty for HSA overcontribution. This is the gift/mistake that keeps on giving since it has been causing me a penalty every year since the mistake.
So here's the question: I did not discover this situation until 2021 for the 2020 tax year? How can I clean this up so that my HSA contributions are square. It looks like it is too late to file an amended return for 2017.
It's really to late to worry about why TurboTax didn't figure it out and apply it back in 2017.
