Hello, thanks for the reply. Sorry but now I'm getting more confused. As I mentioned in my original post, the reimbursement went directly from the hospital back to the HSA Bank account without my advance knowledge.
All the contributions I've ever made to the HSA have come directly from payroll deductions. I paid the $5500 hospital bill in 2021 directly from the HSA with my HSA debit card (big mistake it turns out). The hospital refunded $3900 back to my HSA debit card in 2022 without my knowledge, so the money went right back into the HSA account and was never touched by me (but I saw online that it reappeared back in my HSA account.) There was no 'return of excess distribution' procedure for me to follow, as I did not know it happened until after the fact and was never in possession of the money outside the HSA Bank account.
Example:
1. $8000 in contributions to HSA in 2021 via payroll deductions only (no after-tax contributions directly from my regular bank account) .
2. $5500 payment to hospital in 2021 via HSA Bank debit card; money transferred directly from HSA Bank to hospital (HSA balance $8000-$5500 = $2500).
3. $1600 statement received from hospital, excess $3900 refunded from hospital directly to my HSA Bank debit card/account in 2022 (HSA $2500+$3900 = $6400).
4. That $3900 refunded directly from the hospital was money that I had already contributed in 2021 (part of the original $8000). So if it needs to be counted as a contribution again in 2022, then it will be included on the 5498-SA for 2021 and again on the 5498-SA for 2022, so reported twice but only contributed by me once.
6. That $3900 went directly from the hospital back to my HSA account so the only way I can use it for medical expenses is to make a claim against 2022 expenses and distribute it out of HSA Bank again. Then it will also appear as a distribution on the 2022 1099-SA, so will show as being distributed twice.
7. The $6000 I've paid in medical bills so far in 2022 I have paid out of my private emergency fund, because until I figure out how to sort out this mess I don't want to use the HSA Bank account for anything. Eventually I hope to be able to make claims against the HSA Bank for qualified medical expenses I've already paid privately in 2022.
At this point, is the best course of action to abandon trying to do my 2021 taxes with TurboTax and hire a tax professional to file my taxes for me this year? I don't know how I can fix this and be in compliance with the IRS. Thanks.
