TurboTax 2024 chooses family plan correct?

[eaptls]

Solved: Looks like all of my questions are answered in the instructions for form 8889. I'll see if I can return the excess distribution to the HSA custodian.

My wife and I had separate HDHP plans in 2024. I signed up for Medicare part A only in April 2024. My wife retired in July 2024 and was added to my HDHP plan in Aug 2024 as a life-change event. I retired in Oct 2024 and started Medicare part B in Nov 2024. So as of Nov 2024, only my wife was on my HDHP (now a retiree benefit plan). I ended up over contributing to my HSA in 2024 through payroll deductions and withdrew the excess amount in Nov 2024. Before I entered my wife's HSA details, TurboTax selected self-only on line 1 of my 8889 and its calculation of my excess contribution matched my calculation. Then after adding my wife's HSA/HDHP details, it switched me to Family on line 1 of my 8889. Now it calculates my excess contribution as about 46% of what it was when my 8889 line 1 was self-only. Is that correct? If that is correct, then I withdrew too much in Nov 2024. How do I account for withdrawing too much in TurboTax since its probably too late to put it back?

[BillM223]

"Then after adding my wife's HSA/HDHP details, it switched me to Family on line 1 of my 8889. "

Are you sure that neither one of you indicated Family as your HDHP coverage? TurboTax can handle the situation where two spouses each have separate Self-only HDHP plans, so TurboTax did not "switch" you to Family. Please review your entries.

As an aside, when one of you have Family HDHP coverage, then both of you have Family HDHP coverage for purposes of the 8889, no matter what coverage the other spouse had. TurboTax will allocate the Family HSA contribution limit as needed (you can see this on the 8889-T and 8889-S).

"How do I account for withdrawing too much in TurboTax since its probably too late to put it back?"

You can contribute to your HSA under the 2024 limit until April 15, 2025. NOTE: when you make this contribution you MUST tell the HSA custodian that the contribution is for 2024, or the HSA custodian will assume that it is for 2025. You would be wise to check this after the contribution has been made.

However, when all is said and done, you would be better off letting TurboTax tell you what your excess contributions are, and letting the HSA custodian calculate the amount of earnings on the excess. That is, when you are doing your tax return in TurboTax in the following year, TurboTax will advise you of any excess contributions. Then you are to contact the HSA custodian and ask to withdraw an excess contribution of X amount. The HSA custodian will calculate the earnings, and send you a check for both the excess and the earnings. The custodian will also send you - sooner or later - a 1099-SA with the total amount on it in box 1 and the earnings (included in box 1) in box 2. Box 3 will show a code of 2.

So tell us what you actually entered.

[eaptls]

Thank you @BillM223 for taking the time to respond. After reading the instructions in i8889.pdf, I confirmed that Turbotax's behavior and calculations were indeed correct. Sorry for not taking the time to study those instructions before posting. I would have deleted my posting if I could have figured out how to do that. I'm working with the HSA custodian to get the excess contribution withdrawal returned.

Also it can be a bit confusing when one tries to retrace their steps through Turbotax's interview process as it appears that some steps will be skipped once answers have been provided. I'm guessing that removing all of my 1099-SA forms would have allowed me to fully retrace original HSA interview process.

[BillM223]

You have the right idea, but you would have to remove more forms than the 1099-SA, like your W-2(s), forms 8889-T and -S, and maybe some others, depending. But sometimes that's what you have to do to start over so you can see all the input screens again.

Hopefully, you won't come to that.