Withdrawing excess HSA contribution

[meow-tax]

Hello,

In 2023, I over contributed an excess of $812.52 to my HSA. Before the end of 2023, I withdrew $812.72 out.

I received a 1099-SA with:
Box 1 (Gross distribution): $812.72
Box 2 (Earnings on excess cont.): $0.20

Box 3 (Distribution code): 2

I thought I calculated my withdrawal correctly but it looks like I over withdrew my excess by $0.20.

Q1 - Are there any tax implications with this since now my net contributions are below the 2023 HSA limit of $3850?

Q2 - When I file my taxes in TurboTax and upload this 1099-SA form, will everything be taken care of for me?

Thank you!

[BillM223]

Since the discrepancies are less than $1, it's possible that the IRS won't notice, since TurboTax tends to round thins up to the nearest dollar.

Where did you get the 812.72 from? Did you calculate the excess? It's always safer to let TurboTax calculate the excess because it is difficult for taxpayers to calculate it correctly.

When TurboTax calculated the excess, what did it say? Why do you think that you overwithdrew by 0.20 cents? Because of the earnings? It's just a coincidence that the earnings were $0.20. 

Yes, add the 1099-SA to your 2023 return (because all the earnings were made in 2023), and your form 8889 should be happy.

[meow-tax]

Hi @BillM223, thanks for your reply.

I calculated myself and withdrew only $812.52 which should be the correct amount, but my HSA provider automatically withdrew an additional $0.20 for "Refund of Interest Earned on Excess Contribution". So i guess they included the interest earned with my withdrawal as well which makes it seem like I over withdrew by $0.20.

Would the worst case be that I pay 6% ontop of this additional $0.20 I withdrew?

Thanks

[BillM223 · Accepted solution]

No, you are fine. Yes, the HSA custodian added the earnings to your 1099-SA, which is correct.

You pay the 6% only on excess HSA contributions that you don't withdraw, so they carry over to the next year. You have withdrawn what you were supposed to so you are clear.