HSA excess contribution distribution

[christoft]

I extended my tax return in order to have extra time to remove my excess contribution from my HSA (carry-over from 2023). I did not have a HDHP since 2023.

When turbotax asks if I will remove the contribution, it says it is too late as it is past APril 15, 2025 (I did extend my tax return though). I have removed my contribution as of last week, but how do I change the turbotax question to say I removed it?

[dmertz]

A return of an HSA contribution made for 2023 had to be done by October 15, 2024.  Since that was not done, a distribution to correct the excess is required to be an ordinary distribution equal to the amount of the excess, made taxable by not applying it to any medical expenses.  Because no such distribution was made in 2024, you are again subject to the 6% excess contribution penalty for 2024 as you were for 2023.

If there was no new excess contribution made for 2024, there was no 2024 HSA contribution eligible to be returned.  An ordinary distribution in 2025 of an amount equal to the excess made taxable by not applying it to medical expenses will eliminate the excess on your 2025 that you file next year.  If you were under age 65 at the time of this distribution, the distribution will also be subject to a 20% additional tax.

[christoft]

Ok thank you. It is a small amount so I don't really care about paying the tax on it. I have a separate (Maybe separate) problem with the filing though. When I go through the HSA section, i answer that I did not have any HDHP in 2024. However, when I try to file at the end, it gives me an error and says I need to fill out either "Self" or "Family" for HDHP coverage in 2024 on Question 1 on Form 8889. I already said no earlier (and also no to Medicare) so not sure why it is requiring this. 

[dmertz]

Needing to mark one of the boxes when you had no such coverage is a quirk (a bug, really) of TurboTax, that TurboTax Product Quality fails to acknowledge.  You'll need to mark one of the boxes if you are to e-file.