1099-SA Partial Distribution Code 1, Partial is Transfer to New HSA - Bank Listed Full Amount as Code 1

[user17754140318]

Hi TT Community,

1099-SA shows all funds as Code 1 - normal distrib.  BUT 1/2 was a transfer within bank to new HSA. Bank shows 1) I CONTRIBUTED to HSA when I did not - it is existing funds TRANSFER to new HSA. And 2) did NOT SHOW the transfer to new HSA. Or maybe this is correct way - to show nothing when it is a transfer?  I asked bank for corrected 1099-SA but have not received it.  TT Home & Business says do NOT LIST a Trustee-to-Trustee transfer ONLY A ROLLOVER. I don't know what to tell TT program to get correct info to complete form 

[LindaS5247 · Accepted solution]

Since your bank erroneously reported the transfer as a Code 1 (normal) distribution, you must report (the half of) it in TurboTax as a Rollover to avoid any taxes and penalties on this amount. List the 1099-SA, then indicate the amount was transferred to another HSA to make sure it is not taxed.

Keep all of your documentation showing it was a direct transfer, in case the IRS asks why the Form 1099-SA was issued for it.

See also:

Where do I enter Form 1099-SA?

Please return to Community if you have any additional information or questions and we would be happy to help.

[user17754140318]

Thank you, LindaS5247.  Appreciate your help.