My return was rejected for some issues with my HSA contribution vs distributions. How long do I need to wait to file again?

[StephRs]

Hi - has there been a fix for this issue determined yet? I am getting the same error.

[BillM223]

@wjkaper 

Yes, I did receive your token number, and your return looks exactly the way I expected: your carryover from 2022 was not in line 2, but the calculation on line 13 acted like line 2 had your carryover. Except for the presentation of zero on line 2, your 8889 appears correct.

@StephRs 

The only thing I have heard is what you all have heard - that it will be addressed on February 9.

***To everyone on this thread***

1. It happens that taxpayers sometime accidentally indicate that they have a carryover when they actually don't. If you had excess contributions in 2022 but withdrew them in a timely manner in early 2023, then when you see the question in the HSA interview, "Did you overfund your HSA in 2022?" answer NO, if you corrected the excess for 2022. What TurboTax wants to know is "did you carry over the excess to 2023?" When you withdrew the excess in early 2023, you "cured" the excess contribution for 2022.

2. If you have the desktop product, and you have this situation of line 13 not being equal to the smaller of line 2 and line 12, then try overriding line 2 with the value in line 13. See if it will let you file.

[wjkaper]

Thanks @BillM223 - I was able to override the value in Box #2 on my desktop Turbotax app for form 8889 and was able to e-file it successfully (and it was accepted by the IRS). 

[Justanotherphil]

But is it mathematically accurate? Any impact to refund or debt etc? Nervous to do the same and then have an incorrect entry 

[wjkaper]

@Justanotherphil At least in my case, the explanation @BillM223 gave made sense. Since I bought the audit protection, if the IRS decides to audit me I'll let TurboTax deal with explaining it 🙂 

Ultimately, it was the IRS validation that was failing, and with that change, the IRS validation after I submitted succeeded, so in theory the IRS like that answer more than my original submission. 

[dmertz]

Both lines 2 and 13 of Form 8889 would need to be overridden.  Overriding just line 2 would cause the applied excess to be doubled on line 13.  Overriding will block e-filing.  If TurboTax developers are going to provide a fix in the next few weeks it would be more expeditious to wait for the fix than to file on paper.

[wjkaper]

@dmertz , I changed changed line 2 per the instructions provided which did not double line 13. I then re-filed and the e-filing was accepted by the IRS. If the IRS wants to audit me for what didn't change the amount I owed at all (or if it did, it was a couple bucks), then they can have at it. Let's the TurboTax tax defense team earn their money. 🙂 

P.S. I am NOT a tax professional or anything remotely close, so you do whatever you feel is best. 

[liatemph]

I'll add myself as one more data point of users with this issue. Sounds like the common bond is that we all overfunded a 2022 HSA, but already corrected it during calendar year 2023?

If so, is the guidance to go back to the form and "lie" in our answer to "Did you overfund your HSA in 2022?" or is it best to just wait until Feb 9 and try again? I'm not super interested in trying to wrestle with the desktop client to manually fudge it if I don't have to

[dmertz]

If the excess was not doubled on Form 8889 line 13, it seems like the excess might not be handled on Form 5329 correctly, perhaps omitted from Form 5329 entirely.  As far as I can tell, TurboTax adds the amount from line 2 to the amount from line 43 of Form 5329 and puts the result on Form 8889 line 13.

Doing an override voids the accuracy guarantee.

[Mmg2017]

Running into the same problem. Overfunded in 2022, corrected in 2023.. following the thread and the recommended ‘fixes’ is causing my calculations to say I owe $400 more in taxes. 

[JimS64]

I filed my taxes today with Turbo Tax...received the same rejection as notice as others mentioned (Reject Code F8889-010).

[BillM223]

We have seen a message that this problem might be resolved on February 9th. We have no more information than that.

[BillM223]

@dmertz 

Form 8889 was updated on 2/7. The Line 2 Smart Worksheet was augmented by an extra line showing the HSA carryover amount. Also, the HSA carryover now prints on line 2 so the line 13 now makes sense, and the IRS reject should not happen any longer.

@glennrice91 

@wjkaper 

@FlyinLion 

@Justanotherphil 

@StephRs 

@liatemph 

@Mmg2017

@JimS64

Everyone, please resubmit your returns for e-filing. If it fails, let us know.

[Anonymous]

I see the changes on the form you are referring to BillM223.  However, now I think form 5329 is being calculated incorrectly.  Not sure if its related to the change. 

I have a large HSA carryover that I have been depleting for multiple years.  My employer contributes the maximum for a family.  I have been using the remainder towards the carryover.  In 2022,  line 42 was 20,400, line 43 was 4,500 (the allowed carry over), line 44 was blank, line 45 was 4,500, line 46 was 15,900, and line 47 was blank.  The 6% excise tax was issued on the 15,900 (line 46) for a total of $954.

However in 2023, TurboTax is currently filling the form out as follows.  Line 42 15,900, line 43 0, line 44 blank, line 45 0, line 46 (now titled prior year excess) 15,900, line 47 (now titled 2023 excess) 11,150, line 48 (total excess)  27,050.  The 6% excise tax was issued on 27,050 (line 48) for $1,623.  

The only amount that went into my HSA for 2023 was the employer family contribution of $3000.  So I should have $4750 of carryover to reduce the 15,900 to 11,150.  The excise tax should be issued off the 11,150 at $669.  Instead the software seems to be adding my 2022 carryover to my 2023 carryover for a total of 27,050.

Thank you for any help and insight into this.

[dmertz]

I can see how the developers overlooked the need to change how line 43 of Form 5329 is calculated.  As previously implemented, the calculation involved subtracting from the contribution limit the amount reported on line 2 of Form 8889.  Now that line 2 of Form 8889 includes the amount of the excess, the calculation for line 43 needs to subtract from the contribution limit just the amount of the new contribution, not the amount on line 2 of Form 8889.

So this means that you still can't e-file until Form 5329 is fixed unless you want to file an incorrect Form 5329 and amend later to obtain a refund.  The only alternative right now would be to override line 43 of Form 5329.