Graduated in May lived at home thru Oct. Took HDHP and HSA thru job in July. Dad is claiming me, how do I fill out 8889 so my dad can still claim me?

[crladerer]

My parents financially supported me most of the year, as I was a student for the first 5 months, and I lived at home through October. I do however have my own insurance and HSA plan as of July. I understand I would need to remove HSA contributions if my dad wants to claim me. But when we attempted to fill out form 8889 saying we would do such, it kept giving message that HDHP month plans were incorrect and would not let us pass federal review. How do I go about filling out this form, do I need to contact HSA provider? Why won't turbotax let me edit form?

[BillM223]

"I understand I would need to remove HSA contributions if my dad wants to claim me. "

No, the question is whether or not your dad could claim you. The prohibition against contributing to an HSA is based on whether or not you could be claimed as a dependent, not whether or not you actually are claimed as a dependent.

Look at the text on Dependents starting on page 26 in IRS Pub 17. You need to review the rules for a Qualifying Child or a Qualifying Relative - do you meet either of those categories? You have not given us enough details on your situation for us to know.

"But when we attempted to fill out form 8889 " - are you trying to make entries in the 8889 in Forms mode? Please don't; please use the step-by-step method instead. You are not likely to correctly complete the 8889 by hand.

If you determine that you could be claimed by someone else as a dependent, then go to the HSA interview (Deductions & Credits->Medical->1099-SA, MSA, HSA - the exact navigation may vary from product to product), and proceed through it. In this case, when you see the question, "Was [name] covered by a High Deductible Health Plan (HDHP) in 2023?", and "No, I did not have coverage", and continue from there.

It is possible (likely even) that in the Review, you will be asked what entry you should out on Line 1, Self or Family? Just put Self - TurboTax is confused about why you have an 8889 but did not indicate which type of HDHP policy you had. Don't worry about it - just enter Self and continue.

TurboTax will automatically handle adding the excess back to your income (if the excess was all from your employer) - please don't try to do this yourself. Your only job is to withdraw the excess contributions (there is likely a form for this on the HSA custodian's website) before April 15, 2024.

[crladerer]

I am eligible to be a dependent based on IRA rules. Having difficulty withdrawing excess because I have used some of the excess 2023 funds in 2024, however, No money was spent in 2023, so I do not have a 1099 SA. If that is the case, do I still have to withdraw? 

[BillM223]

OK, withdraw whatever excess you can. The rest of the excess will be carried over to 2024. TurboTax will try to apply the excess carried over as a personal contribution on Line 2 of the 8889. This will work if you have HDHP coverage in 2024 and can not be claimed as a dependent in 2024 (I don't know your situation).

Yes, you should withdraw dollars if you can from the HSA. You should contact the HSA custodian and ask for the "withdrawal of excess contributions" (use this exact phrase). DO THIS TODAY!!! (April 15th)

This will trigger the custodian sending you a 1099-SA. You will enter this in your 2023 return, which you will do in early 2024. 

OK?