HSA distribution

Forum|Forum|4 years ago
February 15, 2022
2 replies
8 views

I used my HSA distribution to reimburse prior year medical expenses. How can I note this on tax return so the amount of the distribution isn't deducted from the determination of the deduction for current year medical expenses?

JohnB5677

Level 15

HSAs carry over from year to year. The IRS sets the annual contribution limits but does not limit the payment of medical expenses.

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Critter-3

Level 15

The HSA is handled in 3 parts in the TT program :

First the contribution:

In most cases, your HSA contribution has already been reported in Box 12 of your W-2 with code W: Employer Contributions to Health Savings Account.

Despite the misleading name, code W reports both your and your employer's contribution. (A better name would be "Contributions to Health Savings Account" but we have no say in the matter.)

So if you put $1,500 in your HSA and your employer matched your contribution, your W-2's Box 12 should have the amount of $3,000 with a code W.

Now, if you made HSA contributions not reported on your W-2 (this is uncommon), we'll ask about that when you step through the Medical section. Look for the questions Were HSA contributions made in 2021? or Do you need to make any adjustments to your HSA contribution amount? Answer Yes and we'll open a screen where you can enter that information.

Next the limitations screen to confirm you are eligible to make the contributions:

Until you complete the HSA portion of the TurboTax interview to establish your eligibility for an HSA contribution, TurboTax will treat the amount entered on the W-2 form as an excess HSA contribution. In the Deductions and Credits tab complete the HSA section of the Medical expenses area to indicate you were allowed to make the contributions.

https://ttlc.intuit.com/community/health-care/help/why-am-i-showing-an-excess-hsa-contribution/00/26610

And lastly any distribution:

Here's how to enter your 1099-SA form:

Click on Federal Taxes > Wages & Income [In TT Self-Employed: Personal > Wages & Income > I'll choose what I work on].
In the Less Common Income Income section, click on the Start/Revisit box next to 1099-SA, HSA, MSA.
Continue through the interview, entering the information contained on your 1099-SA.

To enter medical expenses in TurboTax, please follow these steps:

Click on Federal Taxes > Deductions & Credits [In TT Self-Employed: Personal > Deductions & Credits > I'll choose what I work on].
In the Medical section, click on the Start/Revisit box next to Medical Expenses.
Continue through the interview, entering the requested information on your medical expenses.
You will be asked to confirm the amount you withdrew from your HSA/MSA to pay for medical expenses.

Mike9241

Level 15

medical expenses paid through an HSA are not deductible as medical expenses. if you deducted medical expenses in 2020 that you used your HSA to reimburse in 2021,

You can’t deduct these medical expenses as
an itemized deduction on Schedule A (Form
1040) that are equal to the tax-free distribution
from your HSA

you would need to amend 2020

Mike9241