For 2023, you need to file an amended return. Report that you did not have qualifying HDHP coverage (because the FSA counts as "other coverage" that disqualifies you, even if you did have an HDHP). Tell turbotax you will NOT remove the excess contribution (because it is too late). Turbotax will add the excess contributions back to your taxable income plus assess a 6% penalty. You will need to pay the tax and penalty with the amended return.
So I tried to do this but it was so confusing. How do I check to ensure that it was done correctly i.e. the 6% excise tax applied?
For 2024, tell us about your current situation. Do you have both an FSA and HDHP for 2024? Have you made HSA contributions or plan to make them? What are your insurance plans going forward into 2025?
For this year 2024, I plan on withdrawing all the contributions. I am assuming I will also report that I do not have a qualifying HDHP so TT can add that back into my earned income?
For 2025, we will not have the unlimited FSA. I will opt of a Limited FSA with my HDHP. We should be good for next year.
Thank you!
