1099-R HSA distribution to multiple HSA accounts will not work

[TGref]

I withdrew 10,300 from my IRA to fully fund both HSA accounts for me and my wife. 9,300 to my HSA and 1,000 to my spouse's HSA. The  supporting distribution details screen opens and allows a line to be entered for each HSA and it totals correctly at the bottom. It will not put those two amounts into the two separate HSA but totals back into the main HSA and says I over contributed and places nothing into the spouses.

[Mike9241]

did you do a direct rollover or transfer from your IRA to the two HSA accounts, or did you get a cash distribution for which you put the money as indicated into each account?

You cannot rollover or transfer an IRA account balance to another person's HSA. This would result in a taxable distribution (i.e., a distribution that was not used for a qualified medical expense).

[dmertz]

Expanding on what Mike9241 said, only $9,300 of the $10,300 distribution is permitted to be reported as an HFD.  The other $1,000 is an ordinary distribution.  You'll have to enter your spouse's HSA contribution as a personal HSA contribution.

If you were under age 59½ at the time of the distribution, the $1,000 that is not permitted to be reported as an HFD will be subject to a 10% early-distribution penalty unless you have an exception that applies.

If you were over age 59½, it generally doesn't make sense to report your $9,300 as an HFD either.  With no early-distribution penalty, it generally makes more sense to report it as a personal HSA contribution, avoiding prospect of failing to satisfy the HSA testing period which would result in additional taxes.  If you have no basis in nondeductible traditional IRA contributions, I can think of no reason that it would make sense to report the HSA contribution as an HFD instead of as an ordinary personal HSA contribution.

[TGref]

I took a $10,300 distribution. I then contributed $9,300 to my HSA and $1,000 to my wife's HSA. We are 64 and 61 years of age respectively. I believe it meets all IRS tax rules. Turbo Tax just wont put the other $1,000 to my wife's HSA. I was unable to modify Line 10 A on Form 8889-S to manually enter the $1,000.

[dmertz]

"I was unable to modify Line 10 A on Form 8889-S to manually enter the $1,000."

That's because the tax code does not allow any amount distributed from your IRA to be treated as an HFD to anyone's HSA other than your own HSA.  An HFD to your wife's HSA is only permitted to be made from your wife's IRA.  See section 408(d)(9)(B) of the tax code:

https://www.law.cornell.edu/uscode/text/26/408#d_9