I don't understand how your problem started - your employer normally doesn't know if you made excess HSA contributions, because there are things that affect your annual HSA contribution limit that your employer may not know about.
Well, no matter. Your situation is not unusual -
1. You carried over excess contributions to an HSA from previous years.
2. You've run your HSA out of cash.
3. You now are under some form of Medicare (It doesn't matter which part), so you cannot contribute anything more to the HSA.
OK, tell TurboTax that you will NOT withdraw the excess (since you can't anyway).
What will happen is this:
A. The excess will be carried over to 2025
B. You will be assessed an excise tax (penalty) of 6% of the LESSER of the excess carried over OR the value of your HSA at the end of the tax year. Of course, that is now zero.
C. See line 49 of your 5429, make sure it is now zero.
OK, this means that form 8889 will be attached to your return for the rest of your life. Unfortunately, you must file form 8889 if you made any contributions to or took any distributions from your HSA during the tax year. The excess that is carried over counts as a contribution, because TurboTax is going to try to use it as a personal contribution (line 2, 8889) in the next year.
This is a silly situation that, so far as I know, the IRS has never specifically addressed.
If you don't care that the 8889 is attached to your return, then do nothing, since it will not cost your anything in additional tax. Personally, I might be inclined to go into your list of forms (Forms mode in CD/download) or Tax Tools->Tools->Delete a Form in Online) and just delete the 8889.
The only other thing that I wonder about is this situation about your employer telling you that you had excess contributions. As I said, the employer shouldn't know that, because they can't be sure of what your calculated annual HSA contribution limit is.
Do you mind telling us if you has Family or Self HDHP coverage in 2023, and what your code W amount was, and if you made any direct HSA contributions (i.e., not through your employer)? It not too late to amend your 2023 return if we find an error.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
