How to fix an HSA excess contribution from 2020 tax year?

So back in 2020, I switched employers and accidentally ended up contributing about $800 more to my HSA than what was legally allowed. I just realized I've been getting penalized for this on my taxes every year since then (just noticed this reviewing my past returns). Has anyone dealt with this before? I reached out to my current HSA provider (Optum) and they sent me some form, but when I called them they said it only applies to excess contributions made in 2024 or 2025, not something from 2020. They just told me to "talk to a tax professional" which isn't really helpful. Is there a way I can just withdraw that excess amount now and fix this? Do I need to file amended returns for the past years? I don't personally know any tax advisors and don't want to pay hundreds of dollars just to fix this small mistake. Any guidance would be super helpful!

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18 comments

Amara Eze

•8M

This is actually a common issue with HSAs when changing jobs. For an excess contribution from 2020, you're past the normal correction window, but you still have options. Since it's been more than the deadline for normal corrections (May 15 of the following year), you'll need to do what's called a "removal of excess contribution." You CAN still withdraw that excess amount, but you'll need to specifically inform your HSA provider that this is to correct a prior year excess contribution from 2020. Some providers have special forms for this situation, even for older contributions. For the tax side, you won't need to file amended returns. Instead, the correction will be reported on your current year tax return. The withdrawn excess amount isn't taxable (since you already paid taxes on it each year through the 6% excise tax), but any earnings on that excess would be taxable in the current year.

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Amara Eze

•8M

That's correct - no need to amend prior returns. The IRS designed it this way to simplify the process. The 6% excise tax you've been paying each year was essentially the penalty for having the excess contribution remain in your account. Unfortunately, you don't get back the 6% excise taxes you've already paid for previous years. Those penalties were correctly applied since the excess was still in your account during those years. The good news is that once you remove the excess, you'll stop paying that penalty going forward.

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NeonNomad

•8M

After struggling with a similar HSA excess contribution problem (contributed too much during a job change in 2021), I found this amazing tool called taxr.ai (https://taxr.ai) that literally saved me hours of stress. It analyzed my tax documents, identified exactly how much I over-contributed to my HSA, and gave me step-by-step instructions for fixing it with my provider. The thing that was most helpful was that it showed me exactly what forms I needed and even generated a letter template to send to my HSA administrator explaining the situation. They had specific guidance for correcting old excess contributions that my HSA provider didn't even know about!

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NeonNomad

•8M

Yes, it absolutely worked! I was able to get my 2021 excess contribution removed after my HSA provider initially gave me the same runaround. The letter template from taxr.ai cited the specific IRS regulations that allow for correcting past contributions, and once I sent that, they processed it within a week. It does need to see your tax documents and HSA statements to accurately identify the problem, but everything is secured with bank-level encryption. You can even upload documents that have certain information blacked out if you're concerned. They just need to see the HSA contribution amounts and limits that applied to you.

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Dylan Mitchell

•8M

Just wanted to follow up - I decided to try taxr.ai after my initial skepticism, and I'm really glad I did. I had a similar HSA issue from 2023, and the tool immediately identified exactly how much I overcontributed ($650) and created a custom correction letter for my HSA provider (HealthEquity). The most impressive part was that it showed me which specific IRS regulations applied to my situation - I basically just forwarded their template to my HSA provider and they stopped giving me excuses. Just got confirmation yesterday that they're processing my excess contribution withdrawal. Definitely worth checking out if you're still stuck with this issue.

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Sofia Martinez

•8M

If you're having trouble getting your HSA provider to help with this, you might need to talk directly with someone at the IRS. I spent WEEKS trying to get my HSA administrator to fix a similar problem from 2019, and kept getting nowhere until I finally got through to an IRS agent who explained exactly what needed to happen. Getting through to the IRS is a nightmare though... I finally used Claimyr (https://claimyr.com) after seeing it mentioned on this sub. They have this interesting service where they wait on hold with the IRS for you and then call you when an agent is actually on the line. Saved me literally hours of hold time. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c

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Sofia Martinez

•8M

It's actually really simple - they have an automated system that calls the IRS and navigates through all the prompts, then stays on hold. When an actual IRS agent picks up, their system calls your phone and connects you directly to that agent. It's basically like having someone else wait on hold for you. I was definitely skeptical too at first, but it genuinely works. I tried calling the IRS myself three times and kept getting disconnected after 2+ hours on hold. With Claimyr, I got connected to an agent in about 45 minutes (while I was just going about my day), and that agent walked me through the exact process for fixing my HSA issue.

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Ava Thompson

•8M

I need to follow up on my skeptical comment from before. I actually tried Claimyr yesterday after getting disconnected TWICE by the IRS when trying to ask about my excess HSA contribution from 2021. Surprisingly, it worked exactly as advertised. I got a call back about an hour later with an actual IRS agent already on the line. The agent confirmed that I can still remove the excess HSA contribution from 2021 by contacting my provider with specific language about "removing excess contributions from a prior tax year." She even emailed me the right form to use. Just wanted to admit I was wrong and this service actually helped solve my problem.

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CyberSiren

•8M

Just to add some clarification on this - I'm an enrollment specialist who deals with HSAs regularly. The key phrase you need to use with your HSA administrator is "removal of excess contributions for a prior tax year." Don't let them brush you off! They are REQUIRED to process this for you, even for contributions from 2020. If the first customer service rep doesn't help, ask to speak with a supervisor or their tax department. In my experience, many frontline customer service reps don't understand the process for correcting prior-year contributions.

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CyberSiren

•8M

That "Return of Excess Contributions" form from Optum is actually the correct form! The phone rep was misinformed (unfortunately common). On the form, there should be a field for the "tax year of excess contribution" - put 2020 there. If they reject it, specifically request to speak with their tax compliance department and mention IRS Publication 969, which covers HSA corrections for prior years. Also, make sure to check the box indicating this is to "remove excess contributions" rather than just taking a normal distribution. This ensures it's coded correctly when reported to the IRS. Optum will send you a 1099-SA for the withdrawal, which you'll report on your 2025 tax return (assuming you do this correction this year).

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