HSA Account with no HDHP

[lrcliffordleslieraye]

I'm doing my daughter's taxes. She has an HSA with contributions from her employer. It's listed in box 12 of her W2 with "W." She has never contributed to this. The employer mentioned something about a Cafeteria Plan. She does not have a HDHP. I am unsure how to fill out form 8889. There is no option for this. Also she has never been enrolled in medicare. I chose"none" but this implies she in enrolled in Medicare. What should we do?

[AnnetteB6]

First, double check with her employer to be sure that the W-2 is correct and also verify that she is not enrolled in a High Deductible Health Plan (HDHP).

If it is correct and she does in fact have a Health Savings Account with funds deposited and she is not covered by a HDHP, then she will need to withdraw those funds prior to the due date of the 2019 tax return to avoid a 6% over-contribution penalty.

As you go through the HSA section of her return, you will indicate that she was not covered by a HDHP during the year.  This will generate messages telling you that the contribution to the HSA will need to be withdrawn.  You can indicate that it will be done by the due date of the tax return and an additional penalty will not be assessed on the return.  

[jccrew428]

I have the same issue.  I went through and clicked through those options, but when I go to file, it says that I have to mark on a 8889 form whether I had coverage for self only or family in a HDHP, and it wont let me file unless I choose one of those 2 options.  Neither of which is correct...

[BillM223]

@lrcliffordleslieraye

Do as Annette says and double and triple check with her HR people as to whether her health insurance isn't really an HDHP after all. It is highly unlikely that her employer helped her sign up for an HSA without providing employer-sponsored health insurance that was an HDHP.

Because her employer contributed to her HSA, she must complete form 8889. To start that interview, do a Search (upper right) for hsa and then click on the jump-to result. TurboTax will generate the 8889 based on your answers.

@jccrew428

If you do not have an HSA nor HDHP coverage, you will need to delete any HSA information in order to be able to file. Please do the following:

******

It is possible to accidentally indicate to TurboTax that you had an HSA when perhaps you didn't. If you did not have an HSA, please do the following to remove all traces of HSA information from your return.

See this ===> NOTE: if you see a question "What type of High Deductible Health Plan did you have any December 1, 2018?" (yes, 2018), be sure to answer "NONE".

1. make a copy of your W-2(s) (if you don't have the paper copies)

2. delete your W-2(s) (use the garbage can icon next to the W-2(s) on the Income screen

*** Desktop***

3. go to View (at the top), choose Forms, and select the desired form. Note the Delete Form button at the bottom of the screen.

*** Online ***

3. go to Tax Tools (on the left), and navigate to Tools->Delete a form

4. delete form(s) 1099-SA (if one), 8889-T, and 8889-S (if one)

5. go back and re-add your W-2(s), preferably adding them manually

6. continue with your return.

[jccrew428]

Unfortunately, I dont believe that answers my question.  I had a HDHP five years back and opened an HSA.  3 years ago, i changed my coverage to a traditional health plan, but the HSA is still open.  In 2019, still under my traditional health care plan, my employer had a wellness program which awarded me $1000.  In previous years, they wrote a check, but in 2019 they decided to deposit that money in employees HSA accounts if they had them.  I indicated in the medical section of filing that my family and I DID NOT have a HDHP in 2019, and I indicated that I would take out the $1000 deposited into the account before April 15, but when I go to efile, the software is still making me fill out a 8889 form indicating whether I had self only or family coverage in an HDHP, and wont let me finish filing until I choose one of those options.

[BillM223]

As you can imagine, we here in the Community are always working with incomplete information.

OK, so you have an HSA but no longer have HDHP coverage. That's OK.

Your employer made a mistake by sending that money directly to your HSA without checking first to see if you had HDHP coverage.

Because this was your employer's contribution and their mistake, they actually should contact the HSA custodian and request the withdrawal of the $1,000. The IRS specifically permits this. Then, if your employer is polite, they will cut you a check just like they used to.

Your employer should also have your W-2 updated (did they put a code W in box 12 on your W-2? they should have) as well as notify the HSA custodian so that your 5498-SA gets updated (you might not have received it yet) and so that next year you will receive a 1099-SA stating the earnings made by the $1,000 while it was in the HSA (the earnings  will be added to your Other Income on next year's return).

If your employer is so befuddled that they won't do this, then go ahead and withdraw it yourself. It will be added to Other Income (this is correct).

You will answer the question in the HSA interview that in no point in the year did you have HDHP coverage and that, yes, you will cheerfully withdraw the $1,000 by April 15th.

That will be the end of it.

***Review***

If you are having a problem in the Review in that it is insisting that you enter Self or Family, just enter Self in the Review to get past where you are.

Don't worry about this fib to TurboTax, since you already indicated that you had no HDHP coverage for any month. Your return will be correct in terms of dollars and cents. Telling a fib to TurboTax to get it to do what you want is not the same as fibbing to the IRS. Just keep a record of what you did and why in the very unlikely case that anyone ever asks you about it.

[mot312]

Used leftover fund from HSA account in 2019 but I no longer have an active HDHP plan ( Inactive since 2017). Received a copy of 1099-SA with Gross distribution for the year. When I entered this info. into TurboTax, there was an error 

[Anonymous]

If you leave a HDHP while you have an HSA, you can still spend the funds or use them to reimburse yourself for qualified medical expenses until you empty the account. However, you aren’t allowed to make new contributions to your HSA when you’re not enrolled in a HDHP.

just omit entering distributions. 

[Kuvempu]

Used leftover fund from HSA account in 2022 but I no longer have an active HDHP plan. Received a copy of 1099-SA with Gross distribution for the year. When I entered this info. into TurboTax, there was an error.  How do I fix the error?

[BillM223]

What was the distribution code in box 3 on the 1099-SA?

And what did you use this money foe? Qualified medical expenses?

Where is the error? In the Federal review? Please tell us exactly what the error message said.

Remember that we in the Community cannot see your private tax data, nor tour screen. Help us help you.

@kuvempu  

[Kuvempu]

Distribution code on 1099-SA is 1

when I do federal review after all the entries, smart check found errors on federal tax return and to fix errors is asking me to 

Check This Entry

Form 8889-T:  HDHP coverage check box needs to be checked to indicate the type of coverage held under a high-deductible plan during 2023.  Options are
no entry  ( this is what I have as I do not have hdhp coverage for 2023)

line 1, Self

line 1,Family

Please let me know how to fix this error.  Thanks.

[Kuvempu]

Also, All the distribution was for qualified medical expenses.

[BillM223]

TurboTax gets confused on why you are in the HSA interview, if you don't have HDHP coverage.

In any case, the calculations are correct because you indicated no HDHP coverage.

This means that in the Review, you can safely enter "Self" because (1) it won't affect the calculations, and (2) it will get you past the error in the Review.

[mfvenks2024]

I contributed to my HSA myself without knowing about the 6% tax in 2023. I selected the "no withdraw and pay 6%" option because I don't have enough time or enough funds left in my HSA to withdraw the total amount I made in 2023 before April 15th (I will have to pay my HSA with the remaining amount through a check somehow). In the review, Turbotax asked me to choose among "None," "Self," and "Family" for Dec 2022 in the 8889 form. My HDHP ended in Aug 2022, so apparently, I'm not an eligible person with HDHP coverage. But I read through the definition of "None," and it does not apply (no Medicare used in the month either cause I'm young). What should I do here? Based on reading the answers above, should I choose "Self" here.

[BillM223]

"But I read through the definition of "None," and it does not apply" - NONE means that you did not have HDHP coverage and no conflicting other coverage like regular employer insurance, an FSA, Medicare or being eligible to be claimed as a dependent.

"What should I do here? Based on reading the answers above, should I choose "Self" here." I am having to guess what your issue is. When you were in the HSA interview and you were asked, "Was [name] covered by a High Deductible Health Plan (HDHP) in 2023?", do you answer "No, I did not have coverage?" - this would have been the correct answer in 2023. This also would have set every month in 2023 to NONE for HDHP coverage, which is correct.

In the Review, you would have been asked what to enter for Line 1, Self or Family. The Review does this because it doesn't know why you are in the form 8889 and don't have HDHP coverage - we have asked the Developers for years to address this. But because you have set each month to NONE by your no coverage answer, all the calculations have been done correctly. Hence, setting Line 1 to Self won't hurt anything but it will let you get past this question in the Review.