Hsa Health Savings Account Irs
Health Savings Account penalty/interest for excess funds removal?
This is a CPA question: Quite simply, I put too much money into my HSA account this year. My bank has issued me a check for the overage amount. Now I have a check in-hand that is pre-tax dollars. I know that I am subject to paying the income tax on it, but does the IRS impose penalties for cashing this kind of check? The amount is less than $600 (in case that matters).
Your excess contribution was returned to you in the same year. You cannot deduct that excess contribution, it is part of your gross income and is subject to tax. If it comes from an employer contribution it may appear in Box 1 of your W-2. Otherwise it is entered as “other income.”
The amount returned to you should include both the excess contribution and any earnings. It all goes on your tax return. You don’t have a penalty on the earnings, just income tax.
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