I have a similar issue:
I had a family HDHP insurance and a HSA account in my name for several years. We have always filed as married filing jointly, and used the HSA funds for both of our medical expenses. I was disabled and went on SSD and medicare prior to 12/1/2017. So the last month rule doesn't apply, and I was ineligible for a HSA the entire 2018 year. The HSA account referenced had a balance of $3121.25 on 1/1/2018. We unwittingly contributed the 2018 maximum ($7900 family both 55+) into it thinking it would (as in previous years having a family HDHP) qualify as a family account when we filed since my wife had a HDHP through her employer. I think after reading your reply, it should have. However, when I did our taxes with TurboTax, it appeared that my spouse’s individual HDHP did not cause the HSA account in my name to qualify as a family account since I selected on "medicare or none" all 12 months. We had steep medical expenses in 2018, and used all but $11.25 of the funds on qualified medical expenses in the HSA during the 2018 year. In Jan 2019, we withdrew the remaining $11.25 and closed the HSA account in my name.
I was disappointed that we were not going to be able to take the tax advantage by contributing to a HSA, but I see that TurboTax didn’t show a 6% penalty on excess contributions. However, it did register a 10% penalty ($790) on the $7900, 2018 contributions, even though I selected that I will withdraw all of the funds from the account (before the 4/15/2019 deadline). After reading your reply to this question, I am even more confounded by the results of my entries to the HSA section. We received no tax benefit from the HSA, and withdrew the funds. Four questions:
- Is there a non-excusable 10% penalty for contributing to an ineligible HSA?
- Is there a error in TurboTax in that it did not omit the penalty on the withdrawn funds?
- Shouldn’t TurboTax have allowed a $3450 contribution since my wife had a HDHP all year?
- Can I amend our return and get the $790 penalty refunded?
