"But, none of them sum up to exactly $1458.33. Will that be any problem?" No, so long as the amount of documented expenses is more than $1,458.33. Anything not covered by the $1,458.33 can go to Schedule A, which probably means not go anywhere (most taxpayers can't reasonably deduct any medial expenses on Schedule A).
"the 1099-SA that my old HSA trustee gave me has the distribution code as 2 which is "Excess Distribution"." I was hoping that they had not done this.
Yes, you are correct that the distribution code of "2" indicates that the box 1 amount (if any) is to be ignored and the earnings reported in box 2 are to be added to line 8 on Schedule 1 (1040).
Let's put it this way, you now know that you should not have asked for the withdrawal of excess contributions for tax year 2019, so you are trying to address this as best you can.
If the old HSA custodian reopens the old HSA and accepts your request to return the Mistaken Distribution, then they are required to issue you a new 1099-SA (it's in the instructions for the 1099-SA).
However, if that doesn't happen, then do these two things:
1. change the distribution code to "1" on the 1099-SA
2. manually add the amount in box 2 (the earnings) to Other Income which should appear on line 8 on Schedule 1.
Yes, we discourage taxpayers from altering forms and this may generate a letter from the IRS, but there may be no good way to fix this. All you can do is try to conform to the spirit of the Tax Code when there is no clear path available to you to resolve the issue.
Document everything you did and why, so that you will be ready to answer in case anyone from the IRS ever asks.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
