HSA and FSA

[BillM223]

OK, there are two possible issues.

First, did you see a question that asked "What type of High Deductible Health Plan (HDHP) did [name] have on December 1, 2018?"

If so, then if you did not have an HSA in 2018 or did not contribution to the HSA in 2018, please answer "None" - this question does to apply to you.

Second, did you see a question in the Federal Review asking you what kind of HDHP coverage did you have so you can enter it on line 1 of the 8889? If so, then please indicate "Self". Why? Because you indicated that you did not have any HDHP coverage for the year back in the HSA interview, so TurboTax is wondering why you have an 8889 but didn't indicate what kind of coverage you had.

Just answer "Self" in this case, because line 3 will show an annual HSA contribution limit of zero, which will nullify the Self on line 1.

Problems with line 12 are generally the result of an excess contribution withdrawn amount persisting - that is, even after you change the circumstances, TurboTax remembers that you withdrew this excess. That is why I asked you to delete all your HSA information and start over again. This is the only way to clear it.

To sum up, based on what I have heard so far, after you delete all the HSA information and start the HSA interview over again, you should say

1. that you had an HSA (just be be able to enter the HSA interview),
2. that at no time did you have HDHP coverage in 2019
3. that you will agree to withdraw all the contributions made in 2019 (if the money is in the HSA - it will be better for you if you can),
4. if you see the question about December 1, 2018, just answer "None".
5. If in the Federal Review, if you are asked to indicate Self or Family on line 1, just check Self because it won't matter and it will get you through the review.

Did I get your situation right?

[swfyau83]

Yes! By choosing "Self only" for those questions instead of "Family" it allowed me to finish the review and move on to file.

Thank you for your help!

So to confirm - I will pay taxes on this excess contribution that I am getting back when I file in 2021 for the 2020 year, since I will receive the check this year?

[BillM223]

"So to confirm - I will pay taxes on this excess contribution that I am getting back when I file in 2021 for the 2020 year, since I will receive the check this year?"

Yes, you should not receive the 1099-SA with the distribution code of '2' for the earnings until sometime after January 1, 2021 (probably more like January 31), so you would enter it on your 2020 tax return.

[Lindamartina]

Hello. I am getting married on December 5, 2022. I have a family hdhp and have contributed to an hsa all year. My fiancé has an fsa account.  She was supposed to opt out of her fsa during open enrollment, but didn’t realize her employer automatically re-enrolled her in the fsa. Knowing this I switched my insurance during open enrollment to a non-hdhp plan for the 2023 year. However, what if/any are the tax implications for 2022? Upon reading this article I have stopped contributing to my hsa for the 2022 tax year, but will I have to withdraw the entire year’s contributions since she had an fsa for all of 2022 (and now 2023)? Any help is appreciated! Thanks!

[BillM223]

You started your FSA coverage on December 5, 2022, right? That is, you didn't start any FSA coverage until you got married, right? Since the coverage you have on the first day of the month is the coverage you have for the whole month (in your case, HDHP, not the FSA), you were not covered for any month by the FSA in 2022. Therefore, you had no conflicting coverage to your HDHP in 2022, and so there is no effect on your 2022 return.

You seem to have started out 2023 on the right foot, but I suspect that you will want to drop the FSA and restart the HDHP coverage as soon as you can (which may not be soon) because the HSA program is almost certainly a better deal for you than the FSA.

P.S., You have until April 15, 2023 to contribute to your HSA for 2022 (remember you must specify that the contribution is for 2022) if you want to "fill up" the contributions to the limit for 2022 (which will be the normal HSA annual contribution limit).

@Lindamartina