How to Report Excess HSA Contribution Withdrawal less Custodial Fees?

ionbug
ionbug Member Posts: 1 Newcomer
in Filing my taxes

I contributed $2,000 to my HSA in 2024, and I just discovered I was covered under Medi-Cal the entire year. As such, I shouldn't have contributed to an HSA, and I am working with my HSA Administrator on a withdrawal of my account balance. I have not filed for 2024 yet.

However, my account balance at 12/31/24 (and today) was less than $2,000 due to administrative fees (I didn't use any of the $2,000.)

On the screen, "Will you withdraw your excess HSA contributions?", there are two questions, and I am unsure how to answer one of them:

"Enter the value of all of your health savings accounts as of December 31, 2024, including 2024 contributions made during 2025:" — I assume I will put the balance that is less than $2,000 at 12/31/24.

"Enter the amount of 2024 excess contributions of $2,000 that will be withdrawn and meet the conditions above:" — For this question, should I report the account balance being distributed, which is less than $2,000, or should I report a withdrawal of $2,000?

Thanks!

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Answers

  • KeriC
    KeriC FreeTaxUSA Agent Posts: 222

    @ionbug

    You are correct in how you have outlined reporting this. 

    You have already received a tax benefit of $2000 for contributing to the HSA plan by having that amount excluded from your taxable wages, so you do want to report $2000 as being withdrawn. This will allow the $2000 to be added back to your taxable income.

    You are also correct to list the actual balance as of December 31st, even if your HSA lost value and is less than your contribution.

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