Deductions & credits
It sounds like you may not have checked the box to indicate that only used the distributions from your HSA for qualified medical expenses. (See the attached screen shot.) Immediately after entering an HSA, the refund meter will change, reflecting a taxable distribution. As soon as the box is checked on the next screen, it goes back down.
It is possible to take a distribution from an HSA and not spend it on medical expenses. In this case, the distribution is taxable. So you have to tell the IRS what you did with your distribution. For more information on entering your Form 1099-SA, see the following Help Article:
