Can a Nonqualified HSA Distribution from January 1 - April 15 Apply to Prior Year?

TaxTown2025
TaxTown2025 Member Posts: 1 Newcomer
in Credits/Deductions

Basically - I overcontributed to my HSA in 2023 and no longer have a HDHP. I paid the 6% excise tax for 2023.

I am now trying to remove the overcontribution for future tax filings. If I withdraw the overcontribution + gains today (February 2025), can it be applied to 2024 taxes even though a 1099-SA will not be generated by the custodian for this distribution prior to April 15? All guidance I can find on the topic only points to being able to contribute until April 15 (not the case here) and withdraw the excess contribution up to April 15 of the same tax year (also not the case here).

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Answers

  • KristineS
    KristineS FreeTaxUSA Agent Posts: 250

    Hi TaxTown2025,

    If I understand correctly, the excess was on your 2023 tax return.

    The due date to withdraw the excess was April 15, 2024. That didn't happen so the 6% penalty was charged.

    By withdrawing the contributions and gains now, in February 2025, you're correct that you'll get the Form 1099-SA next year, and apply it to that year's tax return.

    Carefully review each page in the HSA section.  

    Since you had an excess for 2023, answer YES on the "Did you have excess contributions last year?" page and enter the "total excess contributions from Line 48 of your 2023 Form 5329." There are tax helps on each page designated by a "?".  Those tax helps are very helpful so review them as needed.

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