Thank you Bill!
I followed the steps you suggested on March 15, 2024 11:11 AM.
("enter a miscellaneous medical expenses in your Schedule A, where the description is
"HSA adjustment", and the amount is equal to the total of the 1099-SA amounts for qualified medical expenses.")
This seemed to correct my Federal tax due. At the same time, it increased my CA refund. I believe that's proper since California doesn't tax the HSA distribution. I seem to remember that CA also doesn't give a reduction in income for HSA contributions.
For context - I contributed to the HSA for 10+ years, never taking a distribution. In early 2024, I closed the account, making sure that I documented enough previous year medical expenses to exceed the account balance. In case I get audited, I have the documentation.
The 2024 medical expenses I entered were all out of pocket and not reimbursed by the distribution.
Do I still need to perform the CA adjustment to income and add the HSA amount as an addition? Doing so will reduce my CA refund.
(I thought about editing the 1099-SA and changing the amount to zero, but I figured the IRS wouldn't like that and trigger an audit. I also attempted to override line 13b to zero on the Schedule A worksheet, but TurboTax called it an error). This does appear to be a gap in functionality.
