dependent with 2 HDHP coverage

[NTT8]

I'm doing my daughter's tax return and am stuck at 8889 form. My daughter is a full time student and can be claimed as our dependent. For the whole year 2023, she was covered under our family HDHP but during the 3 months when she was at her summer internship, she was also enrolled in the HDHP offered by her company. She did not make any HSA contributions but according to the W-2, her company contributed some $300 to her HSA, which we didn't know existed. For the purposes of Form 8889 smart worksheet line 3, what kind of insurance does she have for each month of the year? Also, does it mean the $300 HSA contributions from her company should be taxed? Where do I enter this information? In addition, it seems like Turbo Tax was saying the $300 wouldn't be taxable if we could use up the $300 before April 15, 2024. Is that correct?

[RobertB4444]

No, she had a HDHP and the $300 went into an HSA.  So it's a legit deduction.  You can enter that she had an HDHP for herself and that $300 can sit there earning interest waiting for her to use it for medical expenses.

However, you can also withdraw it for medical expenses at any time and she can use it without paying tax on it.  If she withdraws it for any other reason it'll be taxable.

@NTT8 

[dmertz · Accepted solution]

Neither dependents nor full-time students are eligible to make HSA contributions, so the $300 contribution made by the employer on your daughter's behalf for 2023 is an excess contribution that is subject to penalty unless returned to your daughter by a return of excess contribution.  Contact the HSA provider to obtain the corrective distribution.  The $300 is taxable on your daughter's 2023 tax return and any investment gains required to accompany the returned $300 contribution will be taxable on your daughter's 2024 tax return, reported on a 2024 Form 1099-SA.