That's actually a really good point and might be exactly how I got into this mess in the first place. I didn't realize my employer's HSA match counted toward my annual limit! Is there any easy way to track this throughout the year so I don't go over again?

The easiest way to track it is to regularly check your HSA statements or online account. Most HSA providers show a running total of all contributions for the year, broken down by source (your contributions vs. employer contributions). Some providers also have alert features you can set up to notify you when you're approaching your limit. Otherwise, I'd recommend setting a calendar reminder to check your total contributions quarterly, especially if your employer makes irregular contributions or matches.

This is actually a great question! The IRS doesn't provide a specific formula, but the generally accepted method is to apply the overall account's rate of return to the excess amount. For example, if your HSA grew by 5% during the period the excess was in the account, you'd calculate 5% of your excess contribution amount to determine the earnings attributable to that excess.

No, that would be incorrect and potentially problematic in an audit. When you dispose of a depreciable asset, you must remove it from your depreciation schedule. Continuing to depreciate an asset that no longer exists is essentially claiming deductions you're not entitled to, which is a red flag for the IRS.

Thanks for clarifying. I didn't realize you had to formally dispose of assets when replaced. Makes sense though - can't double dip on depreciation for essentially the same function.

Form 3115 is serious overkill for this situation. That's for systematic accounting method changes, not for disposing of a single asset. It's a complex form that usually requires professional help and should be avoided unless absolutely necessary.

Thanks for the tip about checking the codes! My 1099-R definitely shows both P and J in Box 7. I'll make sure the software is reading both codes correctly. Did you end up having to file Form 5329 separately or were you able to include it with your regular return through the software?

You can include Form 5329 as part of your regular tax return through the software - no need to file it separately. Most tax software has a section for additional forms where you can find 5329. Just make sure you're selecting exception code 12 specifically for "removal of excess contributions.

I've done this exact thing for 3 years (kept making the same mistake with foreign income and Roth contributions) and never had an issue. As long as you have documentation showing you properly removed the excess contribution, you're doing exactly what the IRS procedures specify.

This is really helpful insider info! Do you think it's better to approach smaller local firms or larger regional ones for a small construction business? I've heard conflicting advice about which provides better personalized service.

For a small construction business, I generally recommend a mid-sized local firm rather than either extreme. The smallest firms (1-2 CPAs) often lack specialized industry knowledge and may not have the bandwidth during busy season. The largest firms typically focus on bigger clients and charge premium rates. A mid-sized local firm with 5-10 CPAs often hits the sweet spot - they typically have at least one person with construction industry expertise but still provide personalized service. They're also more likely to offer flexible billing arrangements like the flat fee model you prefer. Just make sure to ask specifically if they have other clients in construction and what percentage of their practice it represents.

I tried one of those matching services last year for my photography business. The experience was mixed - the price was better than local CPAs, but the person they matched me with didn't really understand state-specific deductions for my industry. I ended up having to explain a lot of things that I feel a more specialized CPA would have known. Might work if your situation is straightforward though.

Thanks for sharing your experience! That's exactly what I was worried about - the lack of specialized knowledge. My situation involves multiple state filings and industry-specific deductions, so it sounds like I might be better off continuing my search for a local CPA who understands my field, even if it costs a bit more.

FreeTaxUSA is good, but I switched to TaxSlayer because their self-employed package has better explanations of deductions specific to my industry. Also half the price of TurboTax.

Thanks for the TaxSlayer recommendation! I'll check them out next year. The industry-specific deduction guidance sounds really helpful. What I loved most about FreeTaxUSA was their audit assistance features and the clear explanations about self-employment tax calculations.