Thank you for the clarifications.
2023
1. As you amend your 2023 return, you needed to go through the HSA interview and report that you had Medicare for whichever months you had it. It does not matter which part of Medicare you had, and it does not matter if you also had HDHP coverage - for purposes of your HSA, you had no HDHP coverage once you got Medicare.
2. This will add the excess amount to line 8f on (schedule 1 (1040)) so that you will pay regular income tax on the amount. When you made these contributions through your employer (thus, with a code of W in box 12 on your W-2), the code W amount was removed from Wages in boxes 1, 3, and 5 - hence these contributions were originally tax-free. Since they were in excess, they needed to be added back to Other Income.
2.5 NOTE: this is done automatically, it is not a function of the 1099-SA. If this add-back was done automatically in 2023, then you will not pay tac on the excess twice.
3. In the HSA interview, tell TurboTax that you will withdraw the excess when it asks. Since you already did this, this is true.
4. Since you withdrew the entire excess for 2023, there is no carryover to 2024 and no 6% on top of the regular income tax.
5. TurboTax will complete your 8889 correctly.
6. Since you withdrew the $8750 excess for 2023 in August 2024, this was technically late (it should have been done by the due date of the return, in mid-April). You have two outs:
A. If you filed an extension for your original 2023 return, you are OK because the due date of the withdrawal got moved from April 15th to October 15th. In this case, you don't need to do anything about this.
B. Otherwise, when you do your 2023 amendment, write on the top of form 8889 “FILED PURSUANT TO § 301.9100-2”, which is a rule in the Code of Federal Regulations that permits an automatic extension of certain deadlines.
If you have already filed your amended 2023 return, then print this answer off and keep it in your tax files in case anyone ever asks.
2024
As you enter your 2024 return, in the HSA interview, do the same thing that you did for 2023: say that you will withdraw the entire excess (which you already have). The new excess ($5,250) will be added to line 8f of Schedule 1 (1040) and subject to regular income tax. TurboTax will fill in your 8889 correctly.
Enter your one 1099-SA for the excess in your 2024. It actually doesn't matter, but you don't want to change forms that were copied to the IRS if you can help it. The monetary result will be the same as if you split it in half and entered each part on the two returns.
If you have already filed your 2023 amendment using the split 1099-SA, well... do the other part of the split for 2024, but realize that you have increased the chances of getting a letter from the IRS. The only solution is to document everything so that you can explain things fully if anyone ever asks.
The two letters from Fidelity belong in your tax archives - the IRS won't want to see them).
Does that cover all your questions?
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