How to report an HSA excess contribution withdrawal for tax filing?

So I recently messed up with my HSA contributions in 2024. I changed jobs mid-year and completely forgot that my new employer was also making contributions to my HSA. Long story short, I ended up contributing more than the annual limit. Once I realized my mistake (while organizing my tax stuff last week), I freaked out a bit and immediately contacted my HSA provider. They were pretty helpful and sent me an excess contribution withdrawal form, which I filled out and sent back right away. They've already processed it and removed the excess amount from my account. But now I'm totally confused about how to report this on my taxes. Do I need some special form? Will this show up on any tax documents they send me? I don't want to mess up my filing and then get hit with penalties. Has anyone dealt with this before? What's the right way to handle this on my tax return?

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20 comments

Dmitry Smirnov

•8M

This is actually a pretty common mistake, so don't worry too much! The good news is you caught it and took action to withdraw the excess contributions. For tax reporting, you'll need to look for Form 5498-SA from your HSA provider which shows all contributions for the year. You should also receive Form 1099-SA that will show the distribution (including your excess contribution withdrawal). When you file your taxes, you'll report your HSA contributions and distributions on Form 8889. The excess contribution withdrawal should be reported on line 13 of Form 8889 as a distribution. However, since this was a correction of an excess contribution, you won't owe taxes on this withdrawal as long as you also withdrew any earnings associated with the excess contribution. One important thing to note: if you withdrew the excess in the same tax year as you made the contribution, you're all set. But if you withdrew it in 2025 (the year after the excess contribution), you may still be subject to a 6% excise tax on the excess amount for 2024.

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Dmitry Smirnov

•8M

Since you withdrew the excess in 2025, you would need to pay the 6% excise tax for 2024. You'll report this on Form 5329 (Additional Taxes on Qualified Plans including IRAs) and file it with your 2024 tax return. The excess contribution gets reported in Part VII of Form 5329, and the 6% tax is calculated there. For Form 5498-SA, you'll still report the actual contributions made during 2024, even though you later withdrew the excess. That's why Form 8889 is important - it's where you reconcile everything. Your Form 1099-SA for 2025 will show the withdrawal of the excess amount, which you'll report on your 2025 tax return next year.

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Ava Rodriguez

•8M

I went through this exact situation last year and found that trying to figure out all the forms was a nightmare! After hours of frustration, I discovered taxr.ai (https://taxr.ai) and it was a game-changer for dealing with my HSA excess contribution mess. I uploaded my 5498-SA and 1099-SA forms and it immediately identified the excess contribution issue. The system walked me through exactly how to fill out Form 8889 and Form 5329 correctly. It even calculated the 6% excise tax I owed since I also withdrew my excess contribution in the following calendar year. The best part was that it explained everything in plain English instead of confusing tax jargon, and showed me exactly where each number needed to go on each form. This saved me so much time compared to trying to decipher the IRS instructions.

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Ava Rodriguez

•8M

It's actually a hybrid approach. The system automatically analyzes your tax documents and identifies issues, but there's also expert review available for complicated situations. For your mid-year coverage change, it would definitely help because it specifically handles HSA contribution limit prorating for partial year eligibility. Regarding the timing issues between tax years - yes, that's exactly what it handled well for me. It correctly identified that my excess contribution was in one tax year while the withdrawal was in the next, and guided me through reporting the excise tax on Form 5329 while also showing how to handle the withdrawal on the next year's return. My tax software also struggled with this specific scenario, which is why I looked for an alternative solution.

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Zainab Ahmed

•8M

Wanted to follow up about my experience with taxr.ai since I was skeptical but decided to give it a try with my complicated HSA situation. Wow, I'm genuinely impressed! Not only did it correctly identify my excess contribution issue, but it also showed me exactly how to report the withdrawal across different tax years. The system caught something I completely missed - I didn't realize I needed to include earnings on the excess contribution in my withdrawal amount. It calculated this for me and showed me exactly where to report it. Would have completely messed this up otherwise. The step-by-step guidance for Form 8889 and Form 5329 was super clear, and it even generated a customized explanation I could keep for my records. Way better than the confusing explanations from my regular tax software. Definitely recommend it for anyone dealing with HSA contribution issues.

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Connor Gallagher

•8M

I had a similar HSA excess contribution problem but on top of that, I couldn't get anyone at the IRS to explain how to properly report it. Called the IRS number at least a dozen times over 3 weeks and just got disconnected or endless hold music every single time. Finally tried Claimyr (https://claimyr.com) after seeing it mentioned online. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. Basically, they hold your place in the IRS phone queue and call you back when an actual agent is on the line. Got connected with an IRS agent within a couple hours who walked me through exactly how to report both the excess contribution and the withdrawal on different tax years. She confirmed I needed Form 5329 for the excise tax and explained the proper way to report the withdrawal on next year's return. Saved me so much frustration!

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Connor Gallagher

•8M

They don't have any special connection to the IRS. The way it works is they use an automated system that keeps dialing and navigating the IRS phone tree repeatedly until it gets through to a human. Once there's an actual agent on the line, their system calls you and connects you directly to that agent. It's basically doing the frustrating redial process for you. It's definitely not a scam - I was skeptical too. What happened is they gave me an estimated wait time (about 2 hours in my case), and then I got a call when they had an IRS agent on the line. The call transferred directly to the IRS agent who identified herself as being from the IRS. I asked all my HSA questions and got clear answers about Form 5329 and the excess contribution reporting requirements.

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Zainab Ahmed

•8M

I need to eat my words about Claimyr. After my skeptical comment, I was still desperate to talk to someone at the IRS about my HSA excess contribution situation, so I decided to try it anyway. I was absolutely shocked when I got a call back in about 90 minutes with an actual IRS agent on the line! The agent was super helpful and walked me through exactly how to report my excess HSA contribution on Form 5329 and explained how the timing between tax years works for the withdrawal. She also gave me some tips about making sure I document everything correctly in case of audit. Apparently HSA contribution mistakes are common enough that they have a standard procedure for handling them. Would have spent days continuing to call on my own based on my previous attempts. This literally saved me hours of frustration and hold music. Sometimes I hate being wrong, but in this case I'm glad I was!

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Yara Khoury

•8M

For anyone dealing with HSA excess contributions, I learned the hard way that the timing really matters! If you catch it and withdraw the excess (plus earnings) BEFORE you file your tax return AND before the tax deadline (usually April 15th), you can avoid the 6% excise tax completely. In my case, I discovered my excess contribution after filing but before the deadline, so I filed an amended return using Form 1040-X along with a corrected Form 8889. Still had to pay the tax preparer extra though, so it's definitely better to catch it early. Another tip: if you're switching jobs mid-year like OP, remember that the HSA limit applies across all accounts, not per account. I track my contributions in a spreadsheet now to avoid this issue.

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Yara Khoury

•8M

It's almost always better to withdraw the excess even after the deadline. If you leave the excess contribution in the HSA, you'll pay the 6% excise tax every year that the excess remains in the account. So if you withdraw it late, you'll only pay the 6% tax once (for the year of the excess contribution). When you withdraw after the deadline, you'll need to include the excess amount as "other income" on your tax return for the year of withdrawal (unless you have qualified medical expenses to offset it). But this one-time inclusion in income is usually better than paying 6% year after year.

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Amina Bah

•8M

Great question! The HSA contribution limit for mixed coverage periods is calculated using the "last-month rule" OR by prorating based on the number of months you had each type of coverage. With the last-month rule, if you have family coverage on December 1st, you can contribute the full family amount ($7,750 for 2024) as long as you remain HSA-eligible with family coverage through December 31st of the following year. If you don't maintain eligibility, you'll have to prorate retroactively. For prorating, you'd calculate: (Individual limit ÷ 12 × # months with individual coverage) + (Family limit ÷ 12 × # months with family coverage) And yes, your HSA provider reports all contributions to the IRS on Form 5498-SA, so they'll know if you over-contributed even if you don't report it yourself.

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Darcy Moore

•5M

Just wanted to add my experience since I went through this exact situation last year! I also had the job change mid-year and exceeded my HSA contribution limit without realizing it. One thing that really helped me was keeping detailed records of everything - the original excess contribution, the withdrawal request, confirmation from the HSA provider, and all the tax forms. When I filed my taxes, having everything organized made it much easier to complete Form 8889 and Form 5329 correctly. Also, don't forget to check if your HSA provider charged any fees for processing the excess contribution withdrawal. Mine charged a $25 processing fee, which was annoying but still way better than paying the 6% excise tax every year if I had left the excess in the account. The key thing is you caught it relatively quickly and took action. Many people don't realize the mistake for years and end up paying that 6% penalty repeatedly. You're definitely on the right track!

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Sergio Neal

•4M

This is really helpful advice! I'm curious about the processing fees - did you happen to ask your HSA provider if they would waive the fee given that it was correcting an excess contribution? I'm wondering if some providers might be more flexible about fees when it's clearly a mistake rather than a regular withdrawal request. Also, when you mentioned keeping detailed records, did you include documentation showing the timeline of when you discovered the excess versus when the contributions were actually made? I'm thinking this might be important if the IRS ever questions the timing of everything.

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