1099-SA Rounding Errors

[bhingles]

This year I have multiple 1099-SA forms reporting HSA distributions of different types.  The problem is that TurboTax rounds the distribution amounts inconsistently.  It adds all of the amounts together before rounding the total into form 8889 Line 14a.  It then uses an individually-rounded value in line 14b.  When the two values are subtracted, the result is incorrect.  It should match the amount in line 15, but it doesn't.  Instead it generates a non-zero value in line 16, which is incorrect and is carried downstream.  I tried overriding the computed values, but TurboTax flags this as an error.  The only workaround seems to be to round the values in the original 1099-SA forms. I'm assuming these aren't filed, so it's probably OK, but it would be better if they were handled consistently outside of the 1099-SA forms.

[BillM223 · Accepted solution]

Line 14d? You mean line 14b?

The workaround to round numbers on the 1099-SA is OK. The IRS gives tax software vendors the right to round numbers as they come into the system, so when you round those numbers, you are just doing what TurboTax is doing.

From your description, the issue seems to be that while the distribution amount is probably rounded when it comes into TurboTax, the amount of qualified medical expenses seems to be handled differently.

I assume that the 1099-SAs are copied to the IRS (they are supposed to be); however, for the reason in the first paragraph, I have trouble believing that this will be a problem.

There is no harm in fudging in TurboTax in order to get the correct output on your tax return. The non-zero number in line 16 is certainly incorrect, as you say, so you are permitted to do what you need to do in a software product to get the correct output.

[bhingles]

Thanks, you're right, I meant 14b.  In a nutshell, TurboTax sums the amounts from multiple 1099-SA forms before rounding, when I believe it should round them before summing.  I did try to manually override the result, but it was flagged as an error.  I didn't try completing my return, so I don't know if the flagged error would have had downstream effects if I had ignored it.  But it looks like the manually-entered 1099-SA forms weren't filed, so I'm not too concerned at this point.  Thanks again for the reply.