When you get an unexpected “Other Income” with either an HSA contribution or an HSA distribution (Form 1099-SA), here are the things to check:
- Make sure you haven’t added your HSA contribution twice. If your HSA contribution was made at work, it should be in Box 12 of your W-2 and is automatically counted when you enter your W-2 in TurboTax. You will only add additional HSA in the Medical section if you made additional HSA contributions that was not through your employer.
- For HSA distributions, you must use the distribution for qualified medical expenses, or it is taxable. After you enter your 1099-SA form, you’ll be asked “Did you spend all the money you took out on medical expenses? If you answer No, the portion you didn’t spend on medical expenses is taxable income.
- You must be enrolled in a high deductible health plan (HDHP) to open an HSA and use it tax-free for medical expenses. Make sure you answer the HDHP questions in TurboTax correctly.
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