BillM223
Expert Alumni

Get your taxes done using TurboTax

"Or are you saying I should put that some of the $505.80 was not for medical expenses?" - It would be simpler to modify an existing withdrawal rather than ask for a new one.

 

"How much should I put as non medical expenses? $120?" - I think your excess carryover from 2022 to 2023 is $110, right? (see line 46 on the 2022 5329). Enter $110. If line 48 on the 2023 5329 goes to zero, then this is right.

 

"But I did not have a HDHP, and I was not eligible to have an HSA account." - The HSA is persistent, and you have it until you actually close it. Not being able to contribute is not the same as not having it.

 

"You mentioned I should answer NONE when asked what type of HDHP coverage you had on December 1, 2022. But in fact I did have a HDHP on December 1, 2022. I left my job at the end of December. Can you clarify please?" - Sure, probably my bad.

 

If you have HDHP coverage on December 1, 2022, then you were eligible to use the last-month rule for 2022 (in fact, TurboTax will use it whether you want it or not). If you use the last-month rule, then you have to maintain HDHP coverage for all of 2023 (I don't think you did that). What good is the last-month rule? It lets you use the maximum annual HSA contribution limit no matter how few months you had HDHP coverage.

 

But in your case, you contributed in the current year just $10 less than your annual limit, so only $10 of the excess was used up in 2022. (that's why the $120 carryover dropped to $110).

 

Anyway, you need to answer that question with Self (I guess that's what you had on that date). Then TurboTax will announce that you had a "lapse" in coverage (technically, "failure to maintain HDHP coverage"). Say it was not due to a disability, and this will direct you to an interview which will try determine if you owe a penalty for tis. 

 

Since you want to be clear of this, just answer the questions, no matter how annoying. You may or may not have a relatively small penalty - you won't know until you do it.

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