I have a one-time transfer from Traditional IRA to HSA (nontaxable transaction as I meet the requirements) and entered in Turbo tax to select the one-time transfer option. It shows up on line 10 of 8889 as qualified fund distribution. However, it is being put in as a taxable transaction (HFD) on the 1040 line 4b.
I have another transaction from my spouse's traditional IRA to convert to Roth IRA. This transaction is being treated as non-taxable (not correct) and is not being put in line 4b.
Note that when I change the input for the one-time IRA to HSA rollover as a regular IRA rollover (uncheck box indicating it is a rollover to an HSA) then the 2 transactions are treated properly (HSA is non-taxable and conversion is taxable). It doesn't make sense that these two transactions are impacting each other as they are two separate transactions (one on my HSA which has family coverage for both of us) and the other a Roth IRA conversion on my spouse's account.
My only solution is to file with the box unchecked as an HSA distribution at this point (so it gets treated as IRA rollover) as that gets me the correct tax treatment. Please advise if there is another option or if this is a bug in TurboTax.
