Keep getting error 8889-T line 1 when efile!

[Ilikematcha121]

Turbotax wont let me efile. I keep getting error on 8880-T line 1 - it has 3 options, no entry, line 1 self and line 1 family. It asks if I had hdhp coverage in 2021 which I did not. The reason why this shows up is we got a w2 that is blank in wages (retired) but my employer sent it because line 12 w shows $1600 which is bonus to my hsa from 2020 but for some reason we got it on W2 2021. I already did not work in dec 2020 and whole of 2021 so do not have hdhp. I want to select no entry since self or family is incorrect but wont let me proceed. What do I do? 

[RaifH]

Since the contribution is being reported in 2021 when you did not have HDHP coverage, TurboTax is correctly reporting this as an excess contribution. You can't contribute to an HSA if you are not covered by HDHP. That means you will pay a 6% penalty on the contribution for every year until either there's no money in your HSA or you withdraw the excess contribution. You can still withdraw it before April 18, 2022 to avoid the penalty. The $1,600 will be included as taxable income this year. To enter it in TurboTax:

1. Enter your W-2 with the Code W in Box 12.
2. This should have opened an area on your tax return for HSAs. If you do not see it, go to Federal > Wages & Income > Less Common Income > 1099-SA, HSA, MSA and click Start/Revisit.
3. Make sure you have HSA selected.
4. If you made any withdrawals from your HSA, you should receive a 1099-SA and answer Yes to Did you use your HSA to pay for anything in 2021? Otherwise, select No.
5. Assuming you did not inherit this HSA, select No.
6. Under Let's enter your HSA contributions your employer amount should already be in there from the W-2. If you made any additional contributions, enter them here. 
7. Answer Did your employer tell you about any other contributions? 
8. Answer the questions on the next two screens, making sure you answer No, I did not have coverage to Were you covered by a HDHP in 2021?
9. Answer Did you overfund your HSA in 2020?
10. This will get you to the excess contribution screen. TurboTax should notify you that the $1,600is an over-contribution and you can still withdraw it by the tax deadline to avoid any penalties. If you answer OK, we'll withdraw the full $1,600 excess contribution by April 18, 2022, TurboTax will add the $1,600 to your taxable income. You will then have to contact your HSA and withdraw the amount. Make sure they know it is an excess contribution so they code the form correctly which you will include on next year's taxes. 
11. Continue through the remainder of the questions in the HSA section of your return. 
12. At that point, there should not be any errors regarding your HSA preventing you from electronically filing. You can also opt not to make the withdrawal, but you will keep paying 6% of $1,600 for every year that there is money in your HSA. 

[Ilikematcha121]

Hi- I tried what you suggested but there’s still an error when trying to e-file.

It says:

Form 8889-t: hdhp coverage check box needs to be checked to indicAte the type of coverage held under a high-deductible plan during 2021

options:

no entry

line 1, self

line 1, family

it wont let us proceed with no entry. There was no hdhp in 2021 at all but the $1600 bonus in hsa was given by employer in 2020 and showed up 2021 w2

[RaifH]

Since it is giving you trouble, on step 8, instead of answering No, I did not have coverage to Were you covered by a HDHP in 2021? instead answer, Yes, I was covered by an HDHP during at least one month during 2021 and then I had different plan types at different times of the year. 

This will take you to a screen where you select your plan type for each month in 2021. Select None for every month, then select Calculate Max Contribution Limit and Continue.

Hopefully, that will clear the error you're encountering. 

[wangay15]

I'm having the same issue and I tried the work around....but I still get the error...I was not under a HDHP in 2023, but I need to report HSA overcontribution.

Any advice?

[BillM223]

@wangay15 

@Ilikematcha121 

When you see the question in the HSA interview, "Was [name] covered by a High Deductible Health Plan (HDHP) in 2023?", check off "No, I did not have coverage."

This should set the HDHP coverage for every month to NONE.

Then, in the Review, when the Review tells you that you have to enter ither Self or Family on line 1, just enter Self, because it won't affect the calculations but will get you around this question in the Review.

[wangay15]

thank you! So I did answer "no" in the "Was [name] covered by a High Deductible Health Plan (HDHP) in 2023?"

and then I selected "self" when TurboTax had me fix the error...

but I still had to select "none" for each month!!!! 

2024 and it still has this glitch.

[wangay15]

I should clarify that I found some of your other replies in similar threads where folks had issues with this. I saw that if you are forced to select/fill in "none" for months (even if after answering "no" to whether one was covered by HDHP in [Year]), to go ahead and do so even though question says "select none if covered by Medicare"

[BillM223]

OK, do you have the Online product or the desktop product (and, if this, do you have Windows or Mac)?

I just ran this test to confirms things on the Windows desktop software, and it worked as I described - once you said no coverage, then everything was OK until you hit the line 1 question in the Review, and entering Self bypassed the problem.

[wangay15]

I am using the Online product on Mac....must be bug for Online/Mac.

Also...question...does the excess HSA contribution that carries over from one year to the next get spit out on Form 8889 under Line 2? Is that correct?

[BillM223]

I would hope that the Online product runs the same on either Windows or Mac - that's up to the browser. The desktop products do have some variations between Mac and Windows.

Yes, excess carryover appears on line 2 of the 8889...as of the first week of February of 2024. Prior to that the carryover was invisibly on Line 2 (i.e., it was part of the calculations on the 8889, just not printed) for many years.

Why? Because the IRS never provided any instructions on how to handle the carryover. It had to be on the 8889 in the first 13 lines, in order for other things to work, but the IRS never said where. 

Now, the IRS rejects e-files with no entry on line 2 (8889), so TurboTax had to start printing the carryover there...even though this conflicts with the printed IRS instructions.

[wangay15]

Thank you so much @BillM223. That was super helpful!

[euolivia]

Hi @BillM223 , I had similar issues but the difference is that: My excess contribution in 2023 tax return was from 2022 tax return excess contribution, which was from my previous company. I cannot add 'W' code to my current company W2.

I was trying to bypass this situation by selecting 'self', but the total return number has been changed (more return to me), which I thought was because it considered the excess contribution as tax deduction.

Did you happen to face this problem? Appreciate it if there is any suggestion.

[BillM223]

Let's see if I got this:

1. You had an excess HSA contribution for tax year 2022.

2. You did not withdraw this short-term excess contribution by April 15, 2023.

3. When you opened your 2023 return (for tax year 2023), this now long-term carryover has carried over to line 2 of form 8889.

4. I take it you don't have HDHP coverage any longer? Otherwise, the scheme to deduct your carryover would have worked. Wait, what do you mean by "but the total return number has been changed (more return to me)"?

   The excess contribution could not be used in 2022, because it was, well, in excess of the limits. However, given the right circumstances (like HDHP coverage in 2023 that can accommodate this carryover contribution without creating another excess), then this carryover can now be added to line 13 on Schedule 1 (1040), as a real deduction that will decrease your tax or increase your refund.

So all maybe OK...let me know if this makes sense...

[euolivia]

Hi @BillM223 , thanks for looking into this!

For the info sync:

1. You had an excess HSA contribution for tax year 2022.

Yes.  Because I changed my job in Jan 2022, but my previous company already gave me the HSA contribution. After Jan 2022, I changed my health plan in new company as non-HDHP plan.

2. You did not withdraw this short-term excess contribution by April 15, 2023.

We did not notice this excess part until now. We do have it on 2022 tax return - 5329.

3. When you opened your 2023 return (for tax year 2023), this now long-term carryover has carried over to line 2 of form 8889.

Yes. Exactly!

4. I take it you don't have HDHP coverage any longer?

I don't have HDHP since Feb 2022. No coverage for 2023 either.

given the right circumstances (like HDHP coverage in 2023 that can accommodate this carryover contribution without creating another excess)

However, I don't have HDHP coverage in 2023. The carryover is still an excess contribution in 2023.

So the normal case is that a person contributed to HSA since he/she had HDHP. So the system would ask the specific coverage type.

in our case, we had previous carryover in HSA considered excess contribution, but we don't have HDHP coverage for almost 2 y. So the carryover triggered this error to request HDHP coverage type that we don't. know how to answer. Any 'self' or 'family' choice would assume I had the HDHP coverage I guess? Then I am stuck here.

Wondering for this situation, how should I bypass/fill the form? Thanks so much for your time investigating this problem!