Former IRS employee here. Your tax preparer is either completely incompetent or deliberately misleading you. There is no such thing as a "transition year" for filing status - that term doesn't exist in the tax code. Your marital status on December 31 determines your filing status for the entire year. Not only should you amend your spouse's return, but I'd seriously consider reporting this tax preparer to the IRS using Form 14157 (Complaint: Tax Return Preparer). Making up fictitious tax concepts like "transition years" is a serious ethical violation for a tax professional, especially when it could potentially impact immigration proceedings.

As someone who went through a similar situation when I got married in September 2025, I want to echo what everyone else has said - there is absolutely no such thing as a "transition year" for newly married couples. This is completely made up by your tax preparer. I also had a tax professional try to convince me of some questionable filing strategies early on, which is why I ended up doing my own research and double-checking everything. The IRS is crystal clear that your marital status on December 31st determines your filing status for the entire tax year - no exceptions. Given that you have immigration paperwork pending, this incorrect filing could create unnecessary complications down the road. Immigration officers look for consistency across all your legal documents, and having mismatched tax filings could raise red flags during your case review. I'd strongly recommend filing an amended return as soon as possible and consider finding a new tax preparer who actually knows the tax code. The fact that they got defensive when questioned about this fictional "transition year" concept is a huge red flag. A competent tax professional should be able to cite specific tax code sections, not make up rules that don't exist. For your own filing, you'll need to file as either Married Filing Separately or amend both returns to file jointly - you cannot file as single since you were married on December 31, 2025.

I'm confused about something. If I have a similar situation but I've been over-contributing for 3 years in a row (not by much, maybe $100-200 each year), do I need to file Form 5329 for each year separately? And do I owe penalties for all 3 years?

Based on all the great advice here, it sounds like you have a clear path forward! Just to summarize for anyone else in a similar situation: 1. File a standalone Form 5329 for 2021 (no need for 1040X) 2. Pay the 6% penalty on your $230 excess (about $13.80) 3. Since your 2022 contributions were under the limit, the excess is "absorbed" - no ongoing penalties I went through something similar last year and was amazed at how much simpler it was than I thought. The IRS actually makes it pretty straightforward to handle these situations when you catch them, even if it's after the fact. One tip: when you mail in your Form 5329, consider sending it certified mail so you have proof of delivery. The IRS can take a while to process these standalone forms, and having that receipt gives you peace of mind that it was received. Good luck getting this resolved! It's really not as scary as it seems at first.

I went through this exact same situation two years ago when my company switched from ADP to Workday mid-year. It was definitely confusing at first, but it's actually a pretty straightforward process once you know what to do. The most important thing is to enter each W-2 exactly as it appears on the form - don't try to combine them or "fix" anything yourself. When I used H&R Block's software, it walked me through adding the second W-2 and even had a specific prompt asking if this was due to a payroll system change, which made me feel more confident I was doing it right. One tip that really helped me: before filing, I added up all the federal tax withheld from both W-2s (Box 2) and compared it to what my final paystub showed for the year. This helped me catch that one of my W-2s was missing about $200 in withholding that should have been included. HR fixed it with a corrected W-2c within a week. The whole process was much less scary than I thought it would be. Just take your time entering the data and double-check everything against your paystubs!

This is actually a very common situation and nothing to stress about! When companies switch payroll systems mid-year, they typically issue separate W-2s for each system rather than trying to combine them into one form. You're absolutely correct to enter both W-2s separately in your tax software - never try to manually combine the amounts yourself. The IRS receives copies of both forms, so they're expecting to see both reported on your return. Most major tax software platforms handle this seamlessly. Look for an "Add another W-2" button after entering your first form. The software might warn you about having the same employer twice, but just confirm that yes, you do have multiple W-2s from the same company. Before filing, I'd strongly recommend adding up the total wages from both W-2s (Box 1) and comparing that to your final paystub of 2024 to make sure the numbers align. Sometimes errors occur during payroll system transitions, and it's much easier to get a corrected W-2c now than to deal with IRS issues later. The bottom line: enter each W-2 exactly as it appears, and let the tax software do the math for you!

One thing to consider - the excise tax is only $2.10 (6% of $35), which is less than the $25 processing fee for withdrawing the excess. Financially, you made the right call. If I were you, I would: 1. Answer "No" to FreeTaxUSA's question about withdrawing the excess 2. Make sure Form 5329 is included with your return (the software should handle this) 3. Pay the small excise tax now 4. Keep documentation from your HSA custodian showing the recharacterization 5. When filing next year, be aware that your 2025 contribution limit effectively includes this $35 The most important thing is proper documentation. As long as you have proof of what happened and report it accurately, you'll be fine!

Great advice from everyone here! I just want to add one more thing that might help - when you're dealing with HSA overcontributions in the future, timing really matters. If you catch the error before your tax filing deadline (including extensions), you can withdraw the excess contribution AND any earnings on it without penalty. But once you file your return, you're locked into either paying the 6% excise tax or dealing with more complex correction procedures. For your current situation, you've already made the right choice given the circumstances. The $2.10 excise tax is definitely better than the $25 processing fee, and you avoided the hassle of dealing with earnings calculations. Just make sure to adjust your HSA contributions for 2025 to account for that $35 that's being applied to next year's limit!

Am I the only one who withdraws from my HSA without actually submitting receipts? I've been saving all my medical receipts for years (have about $3,400 worth) but haven't taken any distributions yet because I'm treating my HSA like another retirement account. I've heard you can reimburse yourself years later as long as the HSA was established before you incurred the medical expense. Is that right?

This is such a helpful thread! I'm dealing with the same situation - got my 1099-SA with code 1 and was worried I did something wrong. Reading through everyone's experiences, it sounds like I'm on the right track. One thing I want to add for anyone else reading this: make sure you double-check that ALL your HSA distributions were actually for qualified medical expenses. I almost made a mistake because I used my HSA debit card at CVS and assumed everything was qualified, but it turns out I bought some regular vitamins and sunscreen that don't count as qualified medical expenses under IRS rules. Also, @Isla Fischer, that strategy of saving receipts and reimbursing yourself later is brilliant! I never thought about using my HSA as a retirement account like that. Definitely something to consider for future medical expenses. Thanks everyone for sharing your experiences - this community is so much more helpful than trying to navigate the IRS website alone!