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Deductions & credits
"I am filling out a Tax Correction Form with my HSA administrator to show it as a reimbursement from distributions." - I am pleased that the HSA administrator is willing to do this. Normally, you the taxpayer have to jump through hoops to get this straightened out.
At the same time that you are having the conversation with the HSA administrator about the "tax Correction form", you can also bring up the topic of a corrected 1099-SA. I am not sure how the administrator will want to handle this situation. Technically, it's a Mistaken Distribution in 2022 (i.e., you paid for something out of the HSA that was a mistake).
In the normal case of a Mistaken Distribution, you would fill out a form, send the administrator the dollar amount that was distributed, and the administrator would correct the paperwork. However, in this case, the administrator already HAS the dollar amount, because it was returned by the insurance company. You'll need to ask them if they can straighten this out without any more intervention on your part.
NOTE: this is a good reason to NOT pay medical bills with your HSA card if there is a chance that some or all of it will be reimbursed by insurance. Instead, you should pay the bill with one of your credit cards, and then after the insurance pays, you can call the HSA administrator and ask to be reimbursed from your HSA for the amount that was not covered by the insurance.
Make sense?
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