How to enter a one time contribution to an HSA from an IRA in Turbotax 2020

[billk_taxes]

I am retired and received a 1099-R from Fidelity that includes an amount for a normal distribution plus an amount I directly rolled over in to my HSA as a one-time rollover.  I can't find anywhere in Turbotax that asks about rolling a portion of this distribution into an HSA so I don't get taxed on it.  My 1099-R from Fidelity has distribution code 7 (normal distribution) and IRA/SEP/SIMPLE checked.

I saw from some Tax year 2018 posts that some were able to get Turbotax to ask about a transfer to an HSA from an IRA distribution.  I did answer all of the HSA questions under Deductions and Credits/Medical so it is aware I have an HSA.

Any help is appreciated.

[ColeenD3]

First, make sure that the IRA box is checked, or you won't get to the screen. As you go through the interview, you will encounter the screen below.

[billk_taxes]

Thanks Coleen, it's nice to know what the screen should look like in my questioning.  My IRA/SEP/SIMPLE box is checked.   I do get some questions, but not like yours below (am using Turbotax Home and Business).  Here's a description of what I get:

1. A screen with a question asking if I inherited it - I reply No and continue.

2. A screen asking if I moved the money to another retirement account or "did something else with it (cashed out, etc.)" - I reply something else and continue.

3. A screen asking if my withdrawal was due to COVID-19 or a Qualified disaster - I reply No and continue.

That's it.  It takes me back to my 1099-R entries.  Based on what you provided, perhaps your version works better for this.  Any idea what forms the amount that was converted show up on?  I will probably just override those form entries since the interview questions appear inadequate for this situation in my version.

[dmertz · Accepted solution]

Since the distribution (code 7) is not otherwise subject to an early-distribution penalty, there is no benefit or need to report it as an HSA Funding Distribution (HFD), so TurboTax won't offer you the opportunity to report an HFD.  Simply report it as a regular distribution as you have already done and enter a regular personal HSA contribution of the same amount in the HSA section.  The resulting deduction on Schedule 1 line 12 will offset the taxable income shown on Form 1040 line 4b.

Reporting the distribution as an HFD is only beneficial to those who would otherwise be subject to an early-distribution penalty on the distribution.

[billk_taxes]

Thanks D, that's what I originally did to get the offset, but wasn't sure it was correct.  I'll leave it and proceed.

BTW - I saw your responses to those TY 2018 questions on the same topic and appreciate the time you have taken to answer.  --Bill