Get your taxes done using TurboTax

The issue is that while the IRS describes a way to handle excess HSA contribution carryovers by "using" the carryover up in the subsequent year, the IRS does not provide a way for you to describe this on the 8889.

The IRS - in a Powerpoint for Vista volunteers (good people, but not authoritative) suggests that the excess carried over should reduce the annual HSA contribution limit in the following year. But there is no documentation in the 8889 instructions for doing this. 

Instead, in the Instructions for form 8889 (page 6), the IRS say, "The excess contributions you can deduct in the current year is the lesser of the following two amounts. • Your maximum HSA contribution limit for the year minus any amounts contributed to your HSA for the year." That is in 2022, you use your normal HSA contribution limit, subtract what you have otherwise contributed in the current year, and if there is anything left, you can "use up" that much excess.

That's the calculation the form actually does, but as you point out, the form doesn't make sense when you do that either. TurboTax has to plug in the amount of the carryover to be used before the form knows how big it can be.

Well, no matter, just take my word for it that there is no good way on the 8889 to do this, so the designers of TurboTax just chose one, with the result that the form's arithmetic seems odd. So don't let that mysterious calculation bother you. You could use up only $100 in the 2021 carryover in 2022, and so the form made it work.

In the past line 2 has been blank, not zero, but it confusing either way. But thanks for pointing this out.

So, two things: yes, the IRS will know where the 5329 numbers are coming from (if they think about it), and no, this odd looking 8889 will not hold up your filing.

I have seen many returns in the last 7 years in which line 2 was blank or 0 because of excess carryover being used up, and have never had complaints about being unable to file.

So please continue with your filing.