Keep getting error 8889-T line 1 when efile!

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. 

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

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. 

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?

@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.

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.

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"

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.

 

 

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?

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.

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

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.

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...

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!

"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."

 

Hmpf, TurboTax should have made a big stink about this on your 2022 return, unless you failed to enter something.

 

OK, for 2023, you don't have a code W in box 12 on your W-2 and you don't have HDHP coverage.

 

So you have no reason to go through the HSA interview. This also means that you won't tell TurboTax that you (or your spouse) that you have HDHP coverage. So HSA calculations should be correct. 

 

This means that if you answer "Self" on the Review question on Line 1 (8889) this should not affect calculations any, but will bypass this loop in the Review.

 

Try this and see.

Got it! Thanks for the explanation.

 

I de-select the HSA part and choose 'self' and go through selections on 'None' coverage for each month plan. It did not change the return amount and passed the everything. Thanks Bill for the help!

 

Just wondering for the future, as far as I know, we should use / withdraw these money out of HSA to prevent further 6% tax. Is that correct?

If you are told by TurboTax that you have an excess contribution in the current year return, then, yes, if you can, withdraw the excess amount by the due date of the return (generally, April 15th). This is the easiest and cheapest solution.

 

/* Fixing the "short-term excess" */

 

You must remember to (1) tell TurboTax that you will withdraw the excess in a timely manner, and (2) call your HSA custodian to request the "withdrawal of an excess contribution" (use this phrase) along with the earnings. The custodian should (1) send you a check for the excess and the earnings, and (2) send you a 1099-SA with a distribution code of '2'. NOTE: the 1099-SA will be entered on next year's return, so don't wait for it.

 

Also NOTE: the excess will be automatically added to Other Income (line 8f of Schedule 1 (1040) or line 13 on Schedule 1 (1040) is reduced) - please do not do anything to report the excess on your 2023 return - TurboTax has already handled it.

 

/* Fixing the "long-term excess" */

 

Sometimes, of course, the HSA is empty of dollars because they have been spent already.

 

In the case, the short-term excess is converted to a long-term excess and is carried over to the next year. Like for the short-term excess, the excess is added to line 8f (see above) or removed from line 13 (see above) AND a 6% penalty is charged on the amount carried over (usually).

 

However, you can't "cure" the long-term excess by withdrawing it in the same way as the long-term excess.

 

The cheapest and easiest way is to reduce the HSA contributions for the next year by the amount of the long-term excess carried over. This carryover will print on Line 2 of form 8889 as a "personal" contribution. So if you reduce your regular HSA contributions, the carryover amount will be used up and the carryover will disappear.

 

Otherwise, you have to make an HSA distribution, and when you enter the 1099-SA, say that it was not for qualified medical expenses. This will add the carryover to Other Income, and add a 20% penalty to your return.

 

But, at least the carryover will be ended.

 

Have I sufficiently overanswered your question? 😉

Absolutely! Thanks so much for your help!