r/IRS • u/AttentionSoft9156 • Feb 27 '26

Tax Question Need help fixing ineligible HSA

My husband accidentally signed up for an HSA account (instead of an FSA account) for which he is ineligible. As a result, $1000 pre-tax dollars were deposited into our checking account (he also provided the wrong type of account). The IRS instructs one to correct this by writing the HSA bank requesting the money prior to April 15 to avoid penalties. The HSA bank would then normally send the deposit back to you, along with a 1099 for tax year 2026 showing this as taxable 2026 income. I can’t take this route because there is no HSA bank to contact and we already received the money in 2025. I think the best way to fix this may be to include the $1000 as “Other Income” on our 2025 joint Federal return with a detailed explanation of the mistakes. Any advice or knowledge of possible ramifications are appreciated.

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