No, HSA withdrawals are not taxable when used for medical expenses. Let's revisit the HSA entry and make sure everything looks correct.
- Click on Federal Taxes, Deduction & Credits
- Choose "add/edit" HSA, MSA Contributions
- You will see a page titled "Your HSA Summary" which will show any deductions already computed from your W-2
- Choose Edit, Check the box for HSA, Continue
- You'll now see a screen that says "Here's what we have so far" with the information from the 1099-SA, choose "Edit"
- After the entry screen for the amount distributed, approximately $6,000, continue and when it asks, "Did you spend your HSA money on medical expenses only?" Answer "Yes."
- Choose done and continue until you get to a screen that says "Let's enter your HSA contributions"
- In the box "Any contributions you personally made (not through your employer)" DON'T enter the amounts you contributed through paycheck withholding. It has already been considered through your W-2 entry.
- Continue on until you are asked if you were covered by a High Deductible Health Plan (HDHP) in 2024? Answer "yes" and beneath that, indicate you had a family plan all year, if you did.
