1. "I did not have a HPDP plan in 2024; " I want to make sure, since you are filing MFS that you are not saying this because your spouse had the HDHP policy, so you feel like maybe you can't claim it MFS. The HDHP coverage is independent of the filing status.
2. "One complication is that if the employer does not remove 12W on W2c," The IRS permits the employer to take back the HSA contribution if you were not eligible and they should have known that (like if you had regular health insurance through them, then they should have known better). If your employer would agree to this, then, yes, they would take the $2,500 back as well as issue you a corrected W-2. BUT if the employer won't do this, then they won't/can't give you a corrected W-2.
3. Lacking a corrected W-2, you will have to go through TurboTax to handle this. NOTE: TurboTax will do the calculations and the adding of excess back to your income - please do not do this yourself in Forms mode. You go into the HSA interview, tell TurboTax that you did not have any HDHP coverage (having HDHP coverage when there is conflicting coverage is the same as not having HDHP coverage), then TurboTax will report an excess of $2,500 which will be added to Other Income automatically. Yes, you will contact the HSA custodian before April 15th to ask for the "withdrawal of excess contributions".
4. Then, sometime before next tax season, you will get a 1099-SA that you will enter on your 2025 return. Because the distribution code will be "2" on that 1099-SA, the amount of excess in box 1 will not be added to your 2025 return because it was already added to your 2024 return, but the earnings in box 2 will be added to your 2025 income, as it should be.
5. As for the issue you are having with TurboTax demanding an answer of Self or Family in the Review, it would be OK to answer either, because you have already told TurboTax that you did not have any HDHP coverage, so all the numbers on the 8889 are correct. Answering Self or Family is just to get around this issue in the Review that holds you up.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
