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daymar72
New Member

HSA distributions are counting toward income? I checked the box stating that distributions were only used for medical expenses. Still appears in main income table

Even though I stated that HSA distributions (Box 1 of 1099-SA) were used 100% for medical expenses - the main income screen/summary table displays my distribution amount under "1099-SA, HSA, MSA". This amount is being counted toward my total income (which is adversely affecting the Child Tax Credit for me).

Should appropriately used HSA distributions count as income?

1 Best answer

Accepted Solutions
BMcCalpin
Level 13

HSA distributions are counting toward income? I checked the box stating that distributions were only used for medical expenses. Still appears in main income table

No, as you suspect, any HSA distributions that were used for qualified medical expenses do NOT count as income.

If you are seeing this number on the Personal Income menu screen, this number is the total of your distributions, not (necessarily) the amount added to income. 

Look at your 1040 preview (Tax Tools->Tools->View Tax Summary and click on "Preview My 1040") and see what is showing on line 21 for Other Income. If you finished the HSA interview after entering all your HSA data and answering all the questions, then you will not see this number on Line 21.

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22 Replies
BMcCalpin
Level 13

HSA distributions are counting toward income? I checked the box stating that distributions were only used for medical expenses. Still appears in main income table

No, as you suspect, any HSA distributions that were used for qualified medical expenses do NOT count as income.

If you are seeing this number on the Personal Income menu screen, this number is the total of your distributions, not (necessarily) the amount added to income. 

Look at your 1040 preview (Tax Tools->Tools->View Tax Summary and click on "Preview My 1040") and see what is showing on line 21 for Other Income. If you finished the HSA interview after entering all your HSA data and answering all the questions, then you will not see this number on Line 21.

daymar72
New Member

HSA distributions are counting toward income? I checked the box stating that distributions were only used for medical expenses. Still appears in main income table

Nothing on line 21 of 1040. I guess it's just a misleading presentation issue. Seeing the HSA distribution amount in the main summary "Income" table pretty much implies it is counting toward total income. Maybe TT can do a better job next year of conveying what in the income table actually counts toward total income and what doesn't (tooltips or badges or something). Thank you!
david-erklouts
New Member

HSA distributions are counting toward income? I checked the box stating that distributions were only used for medical expenses. Still appears in main income table

I had the exact same question/issue. There is no point in showing this amount in the income table if it is not counted toward income! At the very least indicate that the amount is not included in the total.
louflight
New Member

HSA distributions are counting toward income? I checked the box stating that distributions were only used for medical expenses. Still appears in main income table

I agree it is misleding, I had the same question.  I thought it was showing the distribution as income as well.  Thanks for asking the question first.
mdandsm
New Member

HSA distributions are counting toward income? I checked the box stating that distributions were only used for medical expenses. Still appears in main income table

Just spent a long time with an agent trying to figure this out!!!
I see it as a software problem. they should have made 2 categories for hsa distributions.
Income if you spent money on wine and not income if you got meds
stevecates
New Member

HSA distributions are counting toward income? I checked the box stating that distributions were only used for medical expenses. Still appears in main income table

I have same problem. I checked Line 21 on Form 1040 and it does show up as taxable income. How do I correct this problem with the software?
atenor200
New Member

HSA distributions are counting toward income? I checked the box stating that distributions were only used for medical expenses. Still appears in main income table

The key is when filling out the 1099-SA, go to line B of Additional Distribution Information/Medical Expenses.  Check that box to indicate the expenses were for qualified medical expenses.
rwells9444
New Member

HSA distributions are counting toward income? I checked the box stating that distributions were only used for medical expenses. Still appears in main income table

My tax liability changed when I entered a Normal Distribution, all used for medical, from my HSA account. Is there a bug in Turbo Tax?
iookpareke
New Member

HSA distributions are counting toward income? I checked the box stating that distributions were only used for medical expenses. Still appears in main income table

I see the full amount of my distributions showing up on like 21 of my 1040. This was not the case a couple weeks ago but I got a software update for 2017 and now it is all out of whack! My refund has changed significantly. Please help. I need to file this electronically. When is the next update planned?
dmertz
Level 15

HSA distributions are counting toward income? I checked the box stating that distributions were only used for medical expenses. Still appears in main income table

iookpareke, what you are seeing is the result of  bug introduced in the current release (R43) of 2017 TurboTax and is unrelated to the previous posts above.  The workaround for you is to delete the Form 1099-SA and reenter it.
iookpareke
New Member

HSA distributions are counting toward income? I checked the box stating that distributions were only used for medical expenses. Still appears in main income table

Thanks @dmertz . Your workaround fixed it for me. But I'm pretty sure my issue is directly related to the post and comments. 😕
dmertz
Level 15

HSA distributions are counting toward income? I checked the box stating that distributions were only used for medical expenses. Still appears in main income table

All of the previous posts above predate the introduction of the bug that you experienced, so they have some other cause.  I made the statement so that others viewing this question would not necessarily think that deleting and reentering the Form 1099-SA is the fix for any of the previously mentioned cases where an HSA-related amount appears on Form 1040 line 21.  For the previously mentioned cases, deleting and reentering the Form 1099-SA would only correct the problem if the user originally entered the Form 1099-SA incorrectly or answered the follow-up questions incorrectly.
tco0243
Returning Member

HSA distributions are counting toward income? I checked the box stating that distributions were only used for medical expenses. Still appears in main income table

If you itemize all your medical expenses, doctor’s visits, etc, that you paid (not paid by insurance)  also list the ones paid with the HSA account.  It is not clear when they ask you to list them, but you should list the ones you paid out of pocket AND that your HSA account paid. However , don’t list the ones paid by insurance.  It will account and offset for the ones paid with your HSA account behind the scenes with the 1099-HSA  you input.

Critter
Level 15

HSA distributions are counting toward income? I checked the box stating that distributions were only used for medical expenses. Still appears in main income table

 
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