HSA Excess Contribution Reporting – Withdrawal & Interest

tb001
tb001 Member Posts: 9 Newcomer
in Filing my taxes

Hi

We discovered an excess HSA contribution while filing our 2024 taxes and would appreciate guidance on reporting it correctly in FreeTaxUSA.

Here’s our situation:

  • We have a family HSA contribution limit of $8,300.
  • I contributed $2,175 to my HSA earlier in the year.
  • Later, I moved to my wife’s health plan and she contributed $6,500 to her HSA through her employer.
  • That totals $8,675, so we exceeded the limit by $375.

After realizing this during tax prep, we contacted my wife’s HSA provider and requested to withdraw $400 (to cover the $375 excess and any interest earned, which they said is usually just a few cents). The funds will be deposited into our bank account in few days.

I assumed we don’t need to wait for paperwork and can proceed with filing taxes since the withdrawal has been requested.

Now in FreeTaxUSA, I’ve reached the screen: “Will you withdraw wife’s excess HSA contributions?”

Here’s what I did:

  1. For the question “Enter the amount of 2024 excess contributions of $375 that will be withdrawn and meet the conditions above”, I entered $375 (the field doesn’t allow more than that).
  2. For “Enter the value of all wife’s health savings accounts as of December 31, 2024, including 2024 contributions made during 2025”, I entered $6,500 (her total contribution per her W-2).

My questions:

  1. Did I enter the correct information in both fields?
  2. Do I need to report the $25 extra we withdrew to cover interest? If so, where and how should I do that?
  3. How do I calculate the actual interest earned on the excess amount (if required)? Is there a step-by-step guide or calculator within FreeTaxUSA for this?
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