Keep getting error 8889-T line 1 when doing the Smart Check for 2021

[Taxesarefun3]

Have one error to "Fix" before filing on 8889-T for Line 1:

Check This Entry:

Check the box to indicate your coverage under a high-deductible

health plan (HDHP) during 2021

No entry
Line 1, Self
Line 1, Family

However, I did not have an HDHP coverage at any time during 2021. My W-2 does have W in box 12.

I do not have excess contributions from 2020 that are carrying over,  I answered in the HSA questionnaire accordingly ("No we're not going to make this withdrawal"). How can I get around this error?

Please help, thank you!

[BillM223 · Accepted solution]

This is a situation where the Review in TurboTax is confused on why you are answering HSA questions when you didn't have HDHP coverage.

Just check the box for Self - you have already told TurboTax that you did not have any HDHP coverage, so the calculations will be correct. And this will get you past this issue in the Review.

[Taxesarefun3]

Thanks for the response. Now it is asking me 

Do I select Self here as well to by past error?

[Taxesarefun3]

Hi @BillM223 ,

 Do I go ahead and mark none for all the months in 2021 for plan since I marked Self from you previous suggestion for having no HDHP coverage?

[BillM223]

Yes, mark 3A12 as None (it should have been that already).

[Almost]

Regarding the following: "Just check the box for Self - you have already told TurboTax that you did not have any HDHP coverage, so the calculations will be correct. And this will get you past this issue in the Review."

I have a similar issue in TurboTax 2024.  Running Smart Check I keep getting an error on Form 8889-T line 1.  I did not have an HDHP in 2024, but I had an excess HSA contribution carryover from 2023.  If I check "Line 1, Self" the Smart Check will run without this error, but it checks the "Self-only" box on Line 1 of Form 8889-T.  This 8889-T form gets submitted with my return and I'm concerned that it is not accurate because I did not have an HDHP in 2024.  Will this be flagged or cause a problem with the IRS?

[BillM223]

No, it's OK. 

Yes, the Self box will be checked, but Line 3 will have zero or none, showing no coverage, which is what you want.

If the IRS ever writes you a letter about this (I have not heard of them doing this), just explain that you were dealing with a workaround in the tax software that you use. Since all your numbers are correct, that should not be a problem.

How do you plan to deal with the carryover? You have two choices:

1. Apply it as a "personal" contribution the next year in which you have HDHP coverage, or

2. Make a distribution equal to the excess, but when the 1099-SA comes, enter it in TurboTax saying that none of it was for qualified medical expenses. This will add the distribution to your Other Income as well as add a 20% penalty, but the excess will disappear.

[Almost]

Thanks!  I will proceed as suggested. 

And, I have already requested a distribution of the excess contribution since I will no longer have an HDHP now or in the near future.  I understand there will be a 20% penalty.