Possible Amended HSA

[samdesrochers]

An hospital I visited in 2016 just sent me a refund of ~40$ for overpaying their services.  I believe I paid those services with my HSA funds.  I received form 1099-SA about 2 months ago and I don't think the amount on that form (1902.59$) considered that ~40$ refund.  Should I expect to receive an amended 1099-SA from my HSA provider (UMB Bank)?  If so, it will likely arrive after filing date.  What should I do then?

[BMcCalpin · Accepted solution]

No, to get the corrected 1099-SA, you will need to ask your HSA plan administrator for a "Mistaken Distribution" form. Along with this form, you will need to send them the ~$40.

The HSA provider will send you the corrected 1099-SA, either now or for next year.

Have you already filed? If so, you'll want to amend your return so that your forms match what the IRS has (they get a copy of the corrected 1099-SA).

If you have not yet filed, then the easiest thing to do would be to file an extension, especially if you are getting a refund or you are pretty sure of what you will owe. Then when the corrected form comes in (probably in late April), you can file then.

[Edited 3/17/2020 4:25 pm CDT - made year neutral]

[samdesrochers]

As a follow up, I called the hospital that issued the check and the representative was somehow not sure if I paid for the overpaid services with my HSA or with my regular credit card.  I remember at some point in 2016 using my credit card for some services at that hospital, but I also used a large portion of my HSA for other services.

My question is thus: what would be the downside to still following what you recommend above, which is to return the check to my HSA admin and have them put it back as 2016 contributions -> get a corrected 1099-SA.  Would that cause troubles with the IRS?  Since I'm not sure about where the ~40$ comes from, is there a simpler way I could simply forfeit it in my tax report and have that 40$ deduced from my original return (above 1000$ for the year).  I really don't care much about that 40$ being gone... Thanks!

[JRYNCHEK]

My HSA plan administrator has a "Distribution of Excess Contribution" form not a "Mistaken Distribution" form.

Is the "Distribution of Excess Contribution" form the same as the "Mistaken Distribution" from? Will both these forms solve my issue of a refunded payment that makes my gross distribution in inaccurate on my 1099-SA tax form?

[Opus 17]

---

@JRYNCHEK wrote:

My HSA plan administrator has a "Distribution of Excess Contribution" form not a "Mistaken Distribution" form.

Is the "Distribution of Excess Contribution" form the same as the "Mistaken Distribution" from? Will both these forms solve my issue of a refunded payment that makes my gross distribution in inaccurate on my 1099-SA tax form?

---

No, the forms are not the same.  "Distribution of Excess Contribution" would be used if you contributed too much and need the excess distributed (paid) back to you.  "Mistaken Distribution" is used when you withdraw too much (more than your actual medical expenses) and need to send it back.  It might also be called "Distribution Reversal". 

You can only reverse a distribution in the same calendar year.  If you got a reimbursement for an overcharged medical expense that you paid from the HSA in a prior year, you can't return or reverse the distribution.  You would instead report the reimbursement check as a "taxable recovery" on your tax return, that's a type of miscellaneous taxable income, because it represents a reimbursement of a previously tax-free item, the reimbursement is taxable. 

[JRYNCHEK]

OK, so here is my situation:

In January 2023 I received a $140 cash refund back to my HSA account for a medical procedure I had in 2022.

I have received my 2022 1099-SA form and due to the refund, my "gross distribution" is a $140 more than I what I actually withdrew. 

What do you suggest I do?

Would this be considered exceeding the maximum contribution limit for 2023 if I have already maxed out my 2023 contribution limit?

[Opus 17]

---

@JRYNCHEK wrote:

OK, so here is my situation:

In January 2023 I received a $140 cash refund back to my HSA account for a medical procedure I had in 2022.

I have received my 2022 1099-SA form and due to the refund, my "gross distribution" is a $140 more than I what I actually withdrew. 

What do you suggest I do?

---

How was the deposit made to the HSA account?  By you or by the medical vendor?  It is recorded as a contribution instead of a return?  And is it recorded as a contribution for 2022 or 2023?