Thank you, @dmertz, as always you hit the nail on the head. The problem is the distribution code of "G" on the 1099-R. If the OP answers the HSA questions honestly ("did you put the money into an HSA?"), then the $5,150 is duplicated on the 1099-R Summary and eventually blocks the e-file when the number somehow wanders over to the 8606.
If I change the distribution code to 7 (normal distribution) however, the 1099-Summary is correct but the 8889 is not because TurboTax has no idea that there was a contribution to the HSA, and never checks the distribution for excess contributions.
So I am thinking of workarounds.
1. Ask the IRA administrator for a corrected 1099-R with the distribution code changed to 7. However, not only are such administrators loath to issue corrected forms, the administrator could point out that it WAS a trustee to trustee transfer, (right, begr?). dmertz, should the distribution code be 7 in this case, anyway?
2. If I leave the distribution code as G, begr could go through the HSA interview, and could do the following:
A. In the 1099-R interview, do NOT tell TurboTax that the money is going into an HSA. Now the 1099-R Summary and hopefully the 8606 are OK.
B. In the HSA interview, list this as an employer contribution that was not listed on the W-2**. In this case, the 8889 will have the distribution as a contribution, and check it against the calculated annual HSA contribution limit (begr, this has to happen). If there is no excess, then the only funny thing is that the funding distribution appears on line 9 (employer contributions) of the 8889 as opposed to line 10 (qualified HSA funding distribution) on the 8889. But since both numbers are added into line 11, the effect is the same, I think.
** You do this by going into the HSA interview, and when you see the question, "Did [name] put money into the HSA", answer Yes. Then hit Continue on the next screen (Let's enter [name's] HSA contributions" (i.e., no entry on this screen). Then on the next screen where you see, "Did your employer tell you about any other contribution?", answer Yes.
Three new lines will appear. Enter the amount sent to the HSA in the bottom line "Employer and payroll contributions not reported in box 12 of your W-2". Now this will appear on line 9 of the 8889, and almost everything will be perfect.
OK, dmertz, how does this workaround sound to you?
begr, what type of HDHP coverage did you have in 2024 and for how many months? Also, did you make any other contributions to your HSA in 2024?
begr, oh, and thank you for the token, but I was unable to use it. For whatever reason, TurboTax thinks the file is corrupt. I guess this is the best version of sanitizing...now nobody can read it 😉
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