HSA and FSA

[amf100]

My  significant other and I were on different insurances last year. They were on a HDHP, I was not. I contributed $200.00 to my FSA. They had an HSA that they did not contribute to, but their employer contributed $1000.00 to in the same year. I have already used my FSA money. Does it matter if we filed jointly or not? Is this allowed for tax purposes? And if it isn't, how do I fix it? Would I ask my significant other's HSA provider to remove 1000.00 dollars as an excess contribution to fix it so I don't get a penalty?

[xmasbaby0]

Does it matter if we filed jointly or not?

Unless you are legally married, you cannot file a joint tax return.    When you refer to your "Significant Other" are you really referring to a spouse to whom you are legally married?   If not, then whatever you each did with your HSA or FSA accounts are completely separate and are only entered on your own separate tax returns.

[amf100]

@xmasbaby0  We are legally married.

[Mike9241]

If either one of you is covered by a general-purpose health FSA, then you cannot contribute to an HSA. According to IRS rules, a healthcare FSA is considered an additional medical plan. As a result, to remain HSA-qualified and contribute to the account, you or your spouse cannot have a general-purpose FSA. However, you can have a limited-purpose FSA, which can be used alongside the HSA to help pay for dental and vision expenses.

if you had a general-purpose FSA, when it comes to answering questions about HSA, you must indicate there was no HDHP coverage (since Turbotax does not ask about having disqualifying health insurance coverage). Unless you had an extension, the 2024 excess and earnings normally has to be withdrawn by 4/15/2025. With an extension you have until 10/15/2025.

there is an out however, if you timely filed by 4/15/2025. 

If you timely filed your return without withdrawing the excess contributions, you can still make the withdrawal no later than 6 months after the due date of your tax return, excluding extensions. If you do, file an amended return with “Filed pursuant to section 301.9100-2” written at the top.

the reason to withdraw is that each year the excess remains in the HSA you'll pay a 6% penalty (lower of excess or the value of the account on 12/31). and any withdrawal except for medical expenses would be a nonqualifying distribution subject to an additional penalty.