Question about excess HSA contributions

[poncho_mike]

My wife went on Medicare in February 2024.  Prior to that, she was on a HDHP and contributed to an HSA.  She stopped her contributions in February, but the combination of January's contribution and her employer's contribution put her over the allowed limit by $573.

On 4/3/2025, we filled out a form provided by the HSA provider and requested a refund for the excess contributions.  We were sent a check for $573 plus about $.50 in interest on 4/9/2025.  

In early 2026, we received the normal 1099-SA for expenditures from my wife's HSA account.  We also received a 1099-SA showing a Gross Distribution of $573.51 with a distribution code of 2 and showing box 2 Earnings on excess contributions of $.51.

I feel like we ended up paying taxes on the $573 twice.  Should we have received a revised W-2 from her employer? 

[BillM223 · Accepted solution]

No, to paying taxes twice and to asking for a revised W-2.

When TurboTax detects an excess HSA contribution, then it immediately adds back the excess that come through the employer to your Other Income (look at line 8f on Schedule 1 (1040)). Alternatively, if the excess came from "personal" (i.e., direct) contributions, then the deduction number on line 13 (Schedule 1 (1040)) is adjusted to remove the excess. 

If you received a 1099-SA with a distribution code of '2', then the amount in box 1 is ignored, because the taxation of that amount was already handled on your 2024 tax return (go see). Only the earnings (box 2) is added to Other Income on your 2025 tax return.

[poncho_mike]

@BillM223  Thanks for your help.