The HSA is only in one persons name, there is no such thing as a joint account. The person who owns the account must report all of the income from the 1099, it can’t be split. The person who owns an HSA may use it to pay qualified medical expenses for the themself, their spouse, or their dependents, and that is not changed whether you file jointly or separately.
However, you can’t list any medical expenses on your spouse’s tax return as tax deductions if they were paid from your HSA. Further, the fact that you paid your spouse’s expenses from your HSA may screw up the medical expense deduction on your tax return, and you will need to enter a fake offsetting expense.
For example, suppose you withdrew $5000 from an HSA and used $4000 to pay your spouse‘s expenses and $1000 to pay your own expenses. If you then paid another $6000 of expenses for yourself, you would enter $7000 of medical expenses on your tax return. TurboTax will automatically subtract the entire $5000 HSA withdrawal and only give you a net $2000 medical expense deduction, instead of $6000. You would need to enter an additional $4000 of dummy expenses for the TurboTax calculation to come out correctly. This calculation does not get sent to the IRS, they only get the final figure of the expenses that you claim as a deduction. This situation is required because of the way TurboTax operates.
If you filed a joint return, you would simply enter all your medical expenses including the expenses that were reimbursed from the HSA, and let TurboTax subtract the HSA amount.
I want to doubly emphasize that when you file separate returns, both spouses must itemize their deductions. If you stack all the itemized deductions on one spouse and the other spouse takes the standard deduction, the IRS come will come back at you with a bill for the tax due plus penalties and interest. It’s still can sometimes be beneficial to file separately, but you need to make doubly sure you are doing everything correct.
