I believe TurboTax is incorrectly suggesting my spouse and I utilized the last month rule. I think I have a workaround for how to fill out the form so it shows correctly on my 2021 return.
Spouse and I are married filing jointly. We were both on Self only HDHP plans starting Jan 1 2020. In August 2020, I switched onto his plan and so we were on a Family HDHP plan. In 2021, we were still covered by the same Family HDHP plan, and then in June 2021 we switched to a low deductible plan. We combined contributed $7,100 in 2020 (since we were both covered by a HDHP plan the entire year), and $3,000 in 2021 (pro-rated for the months we were on the HDHP plan). So I don't think the last month rule applies here.
TurboTax realizes that we were not on a HDHP plan for the entirety of 2021 ("I had different plan types at different times of the year"), we had Family coverage in Dec 2020, and the Family coverage started in August 2020.
I think it's this last part about Family coverage starting in August 2020 is leading TurboTax to believe that we leveraged the last-month rule since we contributed the full $7,100 in 2020. As a workaround, if we fill out TurboTax to indicate we both had Family coverage throughout all of 2020 (we technically didn't, but my Self coverage + his Self coverage adds up to Family coverage contribution amount), then the "Additional income under the last-month rule" goes to $0.
Does this workaround make sense to use? Or does the last month rule apply in our situation (if it does, could you explain why?). Thank you!
