Excess HSA Contributions

[MikeB_CPA]

In January, 2020, a client added to his 2019 HSA, but he has exceeded the 2019 HSA limit.  I cannot figure out how to remove the excess contribution amount before the return gets filed to avoid the penalty on Form 5329.  The only thing that seems to work is to exclude the excess contribution amount on line 2 of 8889.  That doesn't seem to make sense to me.  Any help will be greatly appreciated.  Thanks!

[Happy-Tax · Accepted solution]

Has the client withdrawn the excess contribution? The surplus can be withdrawn up to the due date of the return (including extensions). If the excess is withdrawn, then his return would be filed with the correct maximum contributory amount.

[MikeB_CPA]

Thanks.  No, the client has not yet withdrawn the excess (because he doesn't even know yet that he over-contributed!) . Your recommendation is exactly what I was thinking, so in essence I will not include the excess amount on Form 8889 because it will be withdrawn before the due date of the return.  Thanks again.

[Happy-Tax]

The client might also consider seeing if the HSA provider can just reassign the excess to his 2020 contributions rather than executing a withdrawal. Just a thought.

I don't know why my prior response was in italics or why it was duplicated. Sorry.

[btks]

@Happy-Taxwhen the OP chooses an answer as having solved their question, it is automatically duplicated.