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Deductions & credits
Did you receive a 1099-SA for $125 or in which the $125 long-term excess was included?
"The excess contribution shows up" - Shows up where? In the Federal Review?
"I'm being pointed back to Form 8889" - How? In the Federal Review?
"not answering the question of who was covered by HDHP during 2023." Are you saying that you two are not doing the HSA interview?
As for the latter point, to enter the 1099-SA (that I hope you got at some point), you will need to tell TurboTax that you have an HSA (which you did until you emptied it), so that you have the chance to enter the form 1099-SA.
Go to Deduction & Credits->Medical->1099-SA, HSA, MSA->Start or Update (the navigation varies slightly from product to product). You will check that whoever had the HSA has one now, then you will go through the HSA interview. When asked if you spent any money (took any distributions) from your HSA, answer Yes so you can enter the 1099-SA.
If the 1099-SA was for the $125, then just say that it was NOT for qualified medical expenses. If the distribution was for more than $125, the answer that "Did you spend your HSA money on medical expenses only?" Answer "No, I didn't", and then some new lines will appear allowing you to specify what amount of the distribution was for medical expenses. Make sure that at least $125 was NOT for medical expenses.
This amount will be added to Other Income and penalized 20%...but the long-term excess that rolls over year and year will finally be cut off and fall off your tax return.
Now, I can't tell if you got a 1099-SA for 2023 or not. I can't tell when you emptied your HSA. Some come back and give us some details...
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