Best way to handle $250 HSA excess contribution?

Junco
Junco Member Posts: 1 Newcomer
in Credits/Deductions

I contributed $250 over the family limit for 2025. Should I have my HSA custodian process an excess contribution refund or should I have them process an individual contribution tax year correction?

I was thinking the individual contribution tax year correction would be simpler. My last contribution in 2025 was for $329 on 12/17/2025, so I was going to have my HSA custodian recategorize my $329 contribution from 2025 to 2026.

When filing, I can select Yes for "Will you withdraw your excess HSA contributions?" Then for 2026, I'll factor in $329 when calculating my workplace contribution total for the year (ie. $8,750 - $329 = $8,421).

Does this work?

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Answers

  • TaxMorgan
    TaxMorgan FreeTaxUSA Agent Posts: 47 image
    Hello Junco,

    Ultimately, it is up to you whether you want to remove the excess contribution from the account or recategorize it to be a contribution for 2026 instead of 2025.

    Please note that the amount of the excess contribution will be entered as taxable income on your return, but there will not be a penalty issued since the excess is reported as being withdrawn.
  • grace_a
    grace_a Member Posts: 1 Newcomer

    I had a similar situation, but I saw that I was going to go over the max contribution last year and submitted the excess contribution form with my HSA provider and received the excess contribution check in August 2025. Now I have two 1099-SA forms from my HSA provider. How should I report this?

    Do I enter the combined amount from the two 1099-SA forms or do I enter the original 1099-SA with the distribution code 1 and then the excess contributions not through my employer based on the difference from my W-2 and the 5489-SA from my HSA provider?

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