The problem is that your daughter is being claimed as a dependent on your tax return. According to the IRS:
To be an eligible individual and qualify for an HSA contribution, you must meet the following requirements.
- You are covered under a high deductible health plan (HDHP), described later, on the first day of the month.
- You have no other health coverage except what is permitted under Other health coverage, later.
- You aren’t enrolled in Medicare.
- You can’t be claimed as a dependent on someone else’s 2024 tax return.
You have two options. The first is do not claim your daughter as a dependent on your tax return. If you have already filed, you could file an amended return. The second is for your daughter to "undo" her HSA. To do that, she will need to remove the money from the HSA. I recommend she contact her HSA administrator on how to remove the funds and report it. It is not treated as a removal of excess contributions. She should not file her return until she has resolve the issue, unless you decide not to claim her.
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