How to report HSA excess contribution removal in TurboTax for 2025 filing

The HSA excess contribution removal needs to be reported correctly to avoid penalties. For a 2022 excess contribution that was removed with earnings, you'll need to report both the contribution removal and the earnings differently. For the excess contribution itself ($1825), since it was removed in a timely manner (assuming before the tax filing deadline including extensions), you won't need to report it as income or pay the 6% excise tax. However, the earnings portion ($63.78) needs to be reported as "Other income" on your tax return for the year you received the distribution. In TurboTax, you might not be seeing the right option because you need to navigate to a different section. Instead of looking specifically for a 2022 excess contribution field, try this: go to the Income section, then look for "Less Common Income" or "Miscellaneous Income" and enter the earnings amount ($63.78) there. You should also receive Form 1099-SA from your HSA provider showing the distribution.

I had almost the exact same issue last year with my HSA excess contribution. After hours of frustration with TurboTax, I finally discovered taxr.ai (https://taxr.ai) which helped me sort through all my HSA documentation. I uploaded my 1099-SA and it immediately identified how to handle my excess contribution and earnings. The tool pointed out that TurboTax doesn't have a dedicated field for 2022 excess contributions removed in 2023, but showed me how to properly report the earnings portion as "Other Income" just like the previous commenter mentioned. It saved me from potentially paying that nasty 6% excise tax on money that was properly returned!

Just wanted to report back about using taxr.ai for my complicated HSA situation with the mid-year coverage change I mentioned. It was incredibly helpful! I uploaded my Form 5498-SA and my insurance documentation, and it calculated my exact prorated contribution limit for the year. Turns out I was eligible for $4,187.50 instead of the $3,650 I thought was my limit (because of the family coverage months). I was actually UNDER-contributing rather than over-contributing like I feared. The tool even created a custom worksheet showing how the calculation worked that I can keep with my tax records in case of an audit. Definitely worth checking out if you have HSA questions!

If you're having trouble getting clarity on your HSA excess contribution issue from TurboTax's help section, you might want to try getting direct answers from the IRS. I was struggling with a similar issue (mine was about HSA eligibility while on my spouse's HDHP) and spent DAYS trying to get through to someone at the IRS. After failed attempts and hours on hold, I tried Claimyr (https://claimyr.com) and was honestly shocked when I got through to an IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent walked me through exactly how to report my HSA situation in TurboTax, including which forms and schedules would be affected.

I'm eating my words from my skeptical comment above. After struggling with my HSA excess contribution questions for weeks, I broke down and tried Claimyr to reach the IRS directly. Not only did I get through in about 15 minutes (!!), but the IRS agent gave me the exact clarification I needed. Turns out my HSA provider had coded my excess contribution removal incorrectly on my 1099-SA, which was causing my TurboTax confusion. The agent walked me through how to properly report it despite the error, and even noted my account so I wouldn't get an automated letter about the discrepancy. I never would have figured this out on my own, and I would have been on hold until next Tuesday trying to reach someone the normal way.

In case this helps anyone, here's what I learned when dealing with my own HSA excess contribution: if you look at the 1099-SA form from your HSA provider, check box 3 for the distribution code. If it's coded as "2" (excess contributions), TurboTax should recognize it in the HSA section. If it's NOT coded as a "2" but was in fact an excess contribution removal, that might be why TurboTax isn't giving you the right options. My HSA provider initially coded mine incorrectly as a normal distribution (code "1") and I had to request a corrected 1099-SA. Might be worth checking!

Has anyone here handled this through H&R Block's software instead of TurboTax? I'm having a similar excess contribution issue but use H&R Block.

I went through this exact same headache last year! The key issue is that TurboTax's interface can be confusing when the tax year of the excess contribution differs from the year you're filing. Since you made the excess contribution in 2022 but are filing in 2025, TurboTax might not be showing the right prompts. Here's what worked for me: Go to the "Income" section first, then look for "Health Savings Account (HSA)" rather than starting in the deductions/health section. When you get to the HSA income questions, there should be an option about distributions or withdrawals. Enter your total distribution amount ($1888.78) there. The system should then ask you to categorize the distribution. This is where you can specify that $1825 was an excess contribution removal (which won't be taxed) and $63.78 was earnings (which will be taxable income). Make sure your 1099-SA matches what you're entering - if the codes are wrong like others mentioned, definitely get a corrected form from your HSA provider first. Also double-check that you're in the right tax year section of TurboTax. Sometimes the software defaults to the wrong year if you have multiple years saved.