2022 HSA Excess Contribution
I have a client that contributed $489 too much to their HSA in 2022. His limit was $8,300 but he contributed $8,789 (excess was because he changed employers mid year). My client just removed the 2022 HSA excess contribution (on 4/14/23) prior to the tax filing deadline. The draft of his 2022 tax return notes $8,789 on line 9 and line 11 on part 1 of form 8889. Is that accurate? Or should that be adjusted to $8,300 since the excess is being removed prior to filing. Just trying to figure out if the $489 excess removal needs to be noted anywhere specific on his return. Is it included in part 2 in total distributions?
Permalink Submitted by David Mertz on Sat, 2023-04-15 18:26
The amount on line 9 of Form 8889 needs to be adjusted to $8,300 and the $489 needs to be included on Schedule 1 line 8z as Other income since this amount would have been excluded from taxable wages in box 1 of the Forms W-2. Any investment gains distributed with the returned contribution will be taxable as Other income on the client’s 2023 tax return when the client receives the code-2 2023 Form 1099-SA.