I tried what you suggested. Federal Tax Due with entries as previously instructed were $2318. When I removed the $1k Other Taxable Income entry, FTD dropped to $2082 which is what it was prior to me initially entering the 1099-SA last week. NOTE: The 1099-SA form entries are intact at this point as is the $1k under Contributions I Personally Made. When I remove the $1k from this field, Federal Tax Due jumps back up to $2318. When I then do as you instructed and go through the screens, entering Yes to Employer Contributions and entering the $1k in Employer and payroll contributions not reported in Box 12 of W2, it DOES NOT result in the Federal Tax Due dropping to the $2082. So while it shows 1,000 on the summary screen as both Total Distributions and Tax Free Employer Contributions, the result of making these entries increased the Federal Tax Due by $236. To me, that appears to be taxing of the HSA.
