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Annuity payment distribution

I withdrew money from my annuity to pay medical expenses, I didn't know that I could deposit this money into my HSA and it would be tax free.  Is there any form that I can use to show that all of this money was used for medical bills and qualify it to be tax free?

2 Replies
Level 15

Annuity payment distribution

Was it a qualified annuity (IRA, 403(b)), or just a regular annuity?
Level 15

Annuity payment distribution

If you are eligible to contribute to your HSA for 2018, you can make an HSA contribution, take a deduction for the contribution, then take a distribution from your HSA to reimburse yourself for any qualified medical expenses that were incurred before the date on which your HSA was originally established.  This doesn't affect how your annuity distribution is taxed, but your medical expenses reimbursed with a distribution from the HSA will end up having been paid with tax-free money as a result of the deduction that you receive for the HSA contribution.

You cannot also take a Schedule A deduction for medical expenses paid with a distribution from the HSA.  TurboTax will automatically subtract from your 2018 medical expenses entered whatever amount of HSA distribution you indicate in TurboTax's HSA section as having been applied to qualified medical expenses.