So if I understand correctly, I could leave my $2100 excess in there, pay the 6% tax one more time for 2024, but then for 2025 I would only contribute $2050 instead of the full $4150? And then everything would be back to normal going forward? That actually sounds easier than trying to get my HSA administrator to do a special withdrawal.

Exactly right! You'll pay the 6% tax ($126) one more time when you file your 2024 return, but then for 2025, you'd only contribute $2050 instead of the full $4150. This way, your total 2025 contribution (including the $2100 excess that remained in your account) equals the maximum allowed contribution. After that, everything is back to normal for 2026 and you can resume contributing the full annual limit. Many people find this approach simpler than dealing with the withdrawal process, especially if your HSA administrator has a complicated process or charges fees for excess contribution withdrawals.

The 6% excess contribution tax applies to the tax year in which the excess contribution occurred. So if you over-contributed in 2023, you'd pay the tax when filing your 2023 tax return (which you'd typically file in early 2024). If you don't correct the excess contribution by withdrawing it or using it up (by contributing less in a later year), then you'll continue paying the 6% tax in each subsequent year until the situation is fixed. That's why the original poster is facing another 6% tax for 2024 - because the excess from 2023 is still sitting in their HSA.

That's really helpful - I had no idea about the December 31 rule! If you don't mind me asking, did you find that filing jointly helped mostly because of tax bracket differences or was it due to certain credits?

For us, it was a combination of factors. The biggest benefit came from the difference in tax brackets - my income "filled up" the lower brackets when combined with some of my husband's income, which kept more of our total income in lower tax brackets than if we filed separately. We also qualified for some credits that are either reduced or eliminated when filing separately, including the child and dependent care credit (which we needed for our daughter). Plus, filing separately would have meant losing some of our itemized deductions due to the percentage of AGI thresholds. When we ran both scenarios, jointly saved us about $3,200.

YES! I found TurboTax completely misleading for our S Corp situation. Switched to TaxAct which handled it better but still wasn't great at explaining the MFJ vs MFS options with business income involved.

I've had good experiences with H&R Block's premium online version for this specific situation. They have a separate business section that handles S Corps properly and explains how it flows to your personal return. Bit more expensive but worth it for the clarity.

5 Would filing a complaint with the state tax board help in this situation? I've heard they sometimes intervene in collection disputes.

14 Filing a complaint with the state tax board might help, but it usually takes time - often weeks or months. It's worth doing if other approaches fail, but I'd try direct negotiation first. That said, some states do have specific regulations about what collection agencies can charge for tax debts. Check your state's department of revenue website for information about third-party tax collectors. Some states require these agencies to register and follow specific guidelines, which might include limits on fees they can charge.

9 Absolutely! Document everything and take it to your employer first. When this happened to me, my HR department initially brushed me off, but when I escalated to the company controller and showed the withholding discrepancy on my pay stubs compared to the tax requirement, they covered the penalties. Companies have insurance for payroll errors for exactly this reason.

Be super careful with claiming real estate professional status! It's one of the most audited positions on tax returns. My brother tried claiming this while still working a 30hr/week job and got audited. IRS wanted DETAILED hour logs for the entire year showing exactly what real estate activities he performed each day. He couldn't produce them and ended up owing back taxes plus penalties.

That sounds interesting - I've never heard of a cost segregation study before. Does it require hiring a specialized company? And wouldn't creating bigger losses just mean more passive losses I can't use now anyway?

Yes, you'd hire a specialized engineering firm that does cost segregation studies. They typically cost $3,000-7,000 depending on property size and complexity, so it's only worth it for properties valued above ~$500k usually. You're right that creating bigger passive losses might not help immediately if you can't use them. But the time value of money makes accelerated depreciation valuable - deductions now are worth more than deductions 20 years from now. And if you're close to qualifying for the $25k allowance, or might have passive income in the future, or might sell in a few years, those increased losses could be valuable sooner rather than later.

Is there a way to report these places? There's a tax office near me that has a giant sign saying "WE GET YOU MAXIMUM REFUNDS GUARANTEED" and they advertise that they "only charge a percentage of what they save you." Seems super sketch.