Problem Reporting Final Distributions from HSA (Form 8889)
Some users who no longer have HDHP coverage, but receive distributions from the remaining HSA funds, cannot e-file their return. This problem is occurring because of electronic processing problems being experienced by the IRS. While the IRS is aware of the problem and is working to fix it, they cannot provide any assurances when the problem will be resolved.
Users with this problem will receive the following message in TurboTax: "IRS Rules Don't Allow E-Filing of your Federal Return".
One workaround would be to paper file your return. For taxpayer’s who would prefer to efile their returns and cannot wait however, TurboTax is providing a workaround.
Follow these steps to use this workaround--
- Select the Federal Taxes tab (the Personal tab in the Home & Business edition).
- Select the Deductions & Credits subtab.
- Scroll down the Deductions & Credits screen until you see the Medical group.
- Click on the Start/Update button to the right of the HSA, MSA Contributions topic.
- Follow the prompts through the HSA interview until you reach the Tell Us About Your HDHP screen.
- Answer Yes to the question “Were you enrolled in a HDHP as of December 1, 2012.”
Although answering this last question Yes may be inaccurate, it will not impact the calculation of tax on your return unless you are reporting any 2012 contributions to your HSA. Otherwise, making this change will allow you to get your return efiled. In addition, please note again that another workaround is to paper file your return.