BillM223
Expert Alumni

Deductions & credits

In your case, this is not a problem. Since you took the standard deduction in 2018, you do not have to worry about the effect of TurboTax appearing to use these 2018 expenses in 2019.

 

You should make an entry on Schedule A that matches the HSA distributions, to offset the automatic transfer of the distributions against medical expenses on Schedule A.

 

For example, near the end of the Medical Expenses interview, you can enter a single line item under Miscellaneous called "expenses reimbursed by HSA" with the amount from the 1099-SA(s).

 

You are correct that some of the HSA distributions were for prior year expenses. And you may think it incorrect to show medical expenses on Schedule A for prior year expenses, just to offset the HSA distributions. 

 

But the fact is that this HSA entry on Schedule A is not going to be part of the return. All you are doing is adjusting the medical expenses entered to compensate for the HSA distributions so that the final Schedule A number for 2019 will be correct.

 

Since TurboTax does not know how much of the distribution was for a prior year, it just subtracts all of them on Schedule A in the belief that you will compensate appropriately on Schedule A.

 

Go ahead and enter the compensating entry as an other medical expense in Schedule A with the total amount of the HSA distributions in 2019 (for all years) - your return will be correct.

 

If you are concerned about doing this, just keep notes of why you did what you did in the very unlikely chance that the IRS will ever write to ask about this.

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