I have excess HSA contribution from 2022 for $700 that i paid 6% excise tax in 2022.
For 2023 here are the following facts:
No longer part of a HDHP, that coverage ended on 7/31/2022
No Contributions were made in 2023 as no longer had coverage
Excess $703 was not withdrawn and do not plan on withdrawing by the filing deadline for tax year 2023.
Based on the above facts that took place in 2023, form 5329 appears to be calculating correctly in that line 42 is reporting the excess contribution from 2022 and 6% excise tax is being calculated. What i don't understand which is my primary question is that TurboTax is generating a form 8889 and the amount that is entered on line 42 of form 5329 is the number on line 2 of form 8889. In the Turbotax questionnaire, I selected that I had no coverage under a high deductible plan during 2023 however form 8889 is still being triggered and line 1 of form 8889 which is "Check the box to indicate your coverage under a high-deductible health plan (HDHP) during 2023" has to be entered either "Self-only" or "Family. What i don't understand is, why is form 8889 even being generated when I did not have coverage? I understand reporting the excess which is still in the account for 2023 on line 42 of form 5329 in order to the excise tax calculation but don't agree based on my understanding as to why 8889 is being generated by the software. Does form 8889 have to be completed if there is still excess in the account even if you did not have coverage resulting in why the answer to line 1 of form 8889 has to either be "Self" or "Family"
