@childclan
The penalty is based on the amount of excess contributions or the remaining account balance, whichever is smaller. I’m not sure if you can end the year with a balance of $600 and avoid a penalty (removing $897 as an excess contribution) or if you must remove the entire $1497. I would have to go over your situation in detail with form 8889 to figure it out, but you could test it in the program.
You can never transfer money from an HSA that you own to an HSA that your spouse owns. HSAs are individual accounts like IRAs and the only time you can transfer directly to a spouse‘s account is as a beneficiary after your death. Your spouse could open an account in their name, and make contributions in their name. Once you withdraw the excess contribution from your account and place it in your own regular bank account, it’s the same as all your other money, and it doesn’t matter what money your spouse uses to fund their account.
If your spouse is eligible for 2021, they can open an account and make contributions for the 2021 tax year up until the April 18, 2022 filing deadline. They could not make contributions for the 2022 tax year if they are not eligible in 2022. (but don’t leave it last minute, because the bank will probably take three or four business days to fully process the transaction.)
In TurboTax, you would check the box that your spouse has family HDHP coverage. They are covered by your policy, even though it is not in their name.
Eligibility is determined based on the kind of insurance you have on the first of each month. You said you left your employer in December. If you were not covered by the HDHP on December 1, then your spouse‘s contribution is limited. Your overall family contribution would be $6600 (11/12ths of $7200), and if you contributed $600 then your spouse could contribute $6000. If you left the job in the middle of December and were covered by the family HDHP as of December 1, your overall family limit is $7200 and your spouse could contribute $6600.
Once you have funds in an HSA, you may keep them indefinitely and use them for medical expenses whenever you like, even if you are no longer qualified to make new contributions.
