Retirement tax questions

You must file Form 8889 if any of the following applies.

• You (or someone on your behalf, including your employer) made contributions in the tax year to your HSA.
• You received HSA distributions during the tax year.
• You must include certain amounts in income because you failed to be an eligible individual during the testing period.
• You acquired an interest in an HSA because of the death of the account beneficiary.

In your case, if you don't satisfy any of these bullet points, don't tell TurboTax that you have an HSA, and it won't ask you any questions or add the 8889.

Since your HSA balance is zero, you are no longer assessed a penalty for the carryover of excess contributions - the penalty is 6% of either the carryover or the value of HSA at the end of the year. Since your HSA value is zero, your penalty is zero.

Dealing with this is an issue if you expect to ever have HDHP coverage again. In that case, you would be expected to apply the carryover to the HSA contribution limit for that year, to use it up.

However, what about those who go on Medicare so can never be eligible to contribute to an HSA again? The IRS so far has been silent on this, but eventually, it doesn't make sense for these retired taxpayers to keep reporting this carryover when under the current law, there is nothing they can do to fix it.