HSA distribution question

Forum|Forum|7 years ago
June 4, 2019
1 reply
9 views

I received a distribution after closing out my HSA. I had switched from a high-deductible account several years ago, and just this past year, the HSA was closed out. Turbotax just asks what medical expenses I had that would qualify for payment with the HSA. I had no expenses, this was just a closeout distribution, and I received a 1099-SA. I think this needs to be included, but I don't see how to add this distribution in Turbotax.

TurboTax Premier Windows

Best answer by BillM223

Yes, the 1099-SA needs to be entered.

To enter it, do a Search for hsa (lower case) and jump to it. You need to check the box that shows you have an HSA in order to be able to enter the 1099-SA. Remember that you did have an HSA in 2018.

The next screen is likely to be the first 1099-SA entry screen. Make the entries and continue through the next two 1099-SA screens.

When you are asked if the distribution was all for qualified medical expenses, answer "no" if that is the case.

NOTE: if you paid with after-tax dollars some medical expenses incurred after the starting date of your HSA, then make a note of the expenses and how they were paid by this distribution. Keep this in your tax file.

Otherwise, when you tell TurboTax that your distribution was not for qualified medical expenses, your distribution will be added to Other Income on line 8 on Schedule 1 (1040) and you will be assessed a 20% penalty on the distribution if you are not 65 or older on the date you received the distribution.

[Edited 3/31/2020 2:48 pm CDT - updated for 2019]