BillM223
Expert Alumni

Deductions & credits

I don't know what the person at the HSA administrator was thinking. What you should have done is reported a "mistaken distribution".

 

Please look at the 1099-SA Instructions for the section entitled HSA Mistaken Distributions.

 

So if the HSA custodian accepts the return of the mistaken distribution (it was a mistake because you did not mean to spend the $280 in the first place for a non-qualified medical expense), then the custodian will (1) probably ask you to fill out a form, and (2) ask you to send them the $280.

 

Well, you sent them the $280 but they recorded it as a contribution as opposed to the return of a mistaken distribution. Call the HSA custodian and ask them to convert this "contribution" to be the return of a mistaken distribution.

 

Be nice, because they don't have to accept the return of a mistaken distribution. But if they balk, refer them to this line in the instructions for the 5498-SA: "For repayment of a mistaken distribution amount, see HSA Mistaken Distributions, earlier. Do not treat the repayment as a contribution on Form 5498-SA." Note that the Instructions for the 1099-SA and the 5498-SA are at the same link (see link above).

 

@NelehCr0z 

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