How do I avoid an error on form 8889-T line 1?

[madison6]

I was a full time student and graduated college in 2017 so my parents claimed me as a dependent since they provided over half of my support. I started my full time job in June and my employer contributed to my HSA but I did not contribute over that. So I was covered by my parents insurance from January-June and my own HSA July-December. I keep getting an error on form 8889-T line 1 whether I select Family or Self. What do I do?

[BMcCalpin]

As you probably know by now, you are not eligible to contribute to an HSA if you can be claimed as a dependent (whether or not you are in fact claimed as a dependent is immaterial). It is a shame that HR departments across the country fail to ask new hires fresh out of school if they could be claimed as a dependent before automatically signing them up for HSA contributions.

You cannot finish the Review until you fix some answers in a counter-intuitive way. Please read the following:

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 (I assume that you have already done this), and TurboTax will declare all the contributions in 2018 as excess. You will need to withdraw this 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.

[87dlh87]

My HSA was over-contributed by accident in 2019 and I paid income tax on the over-contributed amount.  However, I did not realize I would continue a penalty until the excess was withdrawn.  Withdrawal done in 2021.  Form 8889-T will not fill out properly to calculate just the 20% penalty so a TTax rep said to override the calculations on form 8889-T, pay income tax again on the amount of the over-contribution and then the calculation of the 20% penalty shows on the 8889-T form.  I'm not happy to pay tax on an amount I already paid but it's not a lot.  However, TurboTax (Desktop) now says I can't e-file because  of the override on the form??  Can this be fixed??