@jadziedzic wrote:
Similar circumstance: I have had an HDHP/HSA for the past several years. I applied in January 2026 for SS Retirement Benefits to start in April 2026 which automatically enrolled me in Medicare Part A retroactively to July 2025. When I completed the "What type of plan" questions to reflect "Medicare" for July through December 2025 I then had to provide information from my 2024 tax form with the same set of questions even though I was legitimately covered by the HDHP/HSA for all of 2024. Why was that needed?
As test I'm going to kludge up a "fake" 1099-SA pretending I withdrew the excess on December 31, 2025 and compare TurboTax's calculated Federal refund to that amount from the "What type of plan" questions. I'm presuming that should show the same - or close to the same - reduction in my Federal refund; is that a correction presumption?
I can't answer your test question because I don't understand it. If you had successfully withdrawn the excess contributions during the 2025 tax year, you would get a 1099-R for 2025 using code 2 in box 4. But be aware that if you complete the removal of excess in 2026 (before the Apr 15 deadline) you will not get a revised 1099-R for 2025. Instead, you will simply declare the excess on your tax return and remove it.
The questions about 2024 are to see if you made contributions in 2024 under the "last month rule", because if you did, the 2025 contributions are subject to a different kind of penalty. Assuming you did not use the last month rule to make contributions in 2024, those questions would not affect your tax or refund.
What I would do is simply answer the interview questions about how much you contributed and what kind of insurance you had. Your answer for July through December is "none" (no form of eligible HDHP). For January-June, your contribution limit for 2025 would be $2650 if covered by a single HDHP and $4775 if covered by a family HDHP. If you contributed more, Turbotax will say something like "You contributed an excess of $2650. Will you remove that excess before the tax deadline?" If you say Yes, then the excess will be removed, the deductible amount added back to your taxable income (you lose the deduction on that portion) but there are no other penalties. Any interest that is paid to you as part of the removal of excess contribution process is declared as taxable income on your 2025 return (even if it is not paid until 2026). Enter it as bank interest not reported on a 1099-INT.
