@Jon777 wrote:
I have a HDHP with HSA for my family and have had this for 2018, 2019, and 2020. My 23 year old son is on my plan but is not a tax dependent. I assumed he could use my HSA because he was under 26 and permitted to be on my HDHP. He used it for 2018 to 2020 and I have recently learned he is not eligible due to not being a tax dependent in the 3 years. My HSA custodian said for 2019 and 2020 I can send back those funds with a "Mistaken Funds Form" but the deadline is passed for 2018. Is my best approach to amend my 2018 tax return or is there an alternative option? I do have enough other qualified expenses from 2018 that were never paid with my HSA and could "offset" my son's ineligible expenses from 2018 but I'm not sure if the IRS would accept this if I'm audited. Please let me know the best approach. Thanks, Jon.
All you need to show if audited is that your qualifying medical expenses for the year were equal to or more than the amount you withdrew from the HSA. You do not have to do one-for-one matching between expenses and withdrawals.
