How to Report Excess HSA Contribution Withdrawal?

When it comes to managing your HSA, it's important to follow the rules and regulations set by the IRS. If you have made an excess contribution to your HSA account, you will need to report it correctly to avoid any penalties. Here's how you can report an excess HSA contribution withdrawal:

1. Identify the Excess Contribution: Determine the amount that exceeds the annual contribution limit set by the IRS.
2. Withdraw the Excess Amount: Contact your HSA provider and request a withdrawal of the excess contribution amount. Make sure to specify that it is an excess contribution withdrawal.
3. Complete IRS Form 5329: You will need to fill out Form 5329 to report the excess contribution withdrawal. This form is used to calculate the additional tax owed on the excess amount.
4. Include Form 5329 with Your Tax Return: When you file your taxes for the year in which the excess contribution was made, include Form 5329 to report the withdrawal and calculate any additional tax owed.
5. Pay Additional Taxes: You may be subject to a 6% excise tax on the excess contribution amount. Make sure to pay this amount along with your regular taxes to avoid any further penalties.

Reporting an excess HSA contribution withdrawal may seem daunting, but following these steps can help you navigate the process smoothly and avoid any unnecessary consequences.

Dealing with excess contributions to your HSA can often feel overwhelming, but it's vital to address them promptly. The very first step in this process is identifying the excess contributions, which entails comparing your total deposits to the IRS's annual contribution limit.