BMcCalpin
Level 13

Deductions & credits

It is a shame that employers do not ask recent college graduates if they can be claimed as a dependent the first year before signing them up for an HSA and a payroll deduction program. It causes a lot of trouble for these new employees, and employers ought to know better.

Because you were able to be claimed as a dependent (even if you weren't), you were not eligible at all to contribute to your HSA in 2018. This is different from making an excess contribution (although TurboTax treats it in a similar way).

So you will tell TurboTax in the HSA interview that you did not have HDHP coverage at any point in 2018 (Check the "no" box when asked if you had HDHP coverage at any time in 2018), and TurboTax will declare all the contributions in 2018 as excess. Yes, answer "no" in this case even though you had HDHP coverage - in the eyes of the IRS, you did not.

You will need to withdraw this excess amount or as much as you can before April 15, 2019. Be sure to tell the HSA custodian that you are requesting the "withdrawal of excess contributions" so they will report it correctly to the IRS.

In the Review, you may get new errors. If you do, this is how you address them:

1. If the Review asks you to check a box on Line 1 of form 8889, go ahead and check "Self" (It won't matter, but it will help get you clear of the Review).

2. If the Review asks you to check a box in the Line 3 Smart Worksheet of form 8889, go ahead and check "None" for A1 through A12 (i.e., each month).

2. If the Review asks you to check a box in the Line 18 Smart Worksheet of form 8889, go ahead and check "None" for B1 through B12 (i.e., each month).

This should clear the form 8889 errors and let you e-file.