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I made a redeposit to my HSA after receiving 1099-SA. HSA provider said they will not issue corrected 1099-SA, but will report redeposit. How do I enter redeposit in TT?
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I made a redeposit to my HSA after receiving 1099-SA. HSA provider said they will not issue corrected 1099-SA, but will report redeposit. How do I enter redeposit in TT?
Was the 1099-SA referring to a mistaken distribution (i.e., you took money out of the HSA but later realized that it was not for a qualified medical expense? A possible situation would be if you unexpectedly received an insurance reimbursement for something you paid for with HSA funds).
May I assume that the entire distribution reported on the 1099-SA was returned to the HSA custodian as a mistaken distribution? The HSA custodian must report a correction to the IRS and must send you a corrected 1099-SA (see the 1099-SA instructions below).
However, I see that the HSA custodian is refusing to do so. TurboTax is programmed to assume that the HSA custodian will do the proper thing and issue a corrected 1099-SA.
If you enter the original 1099-SA and correctly indicate that it was not for medical expenses, then TurboTax will calculate additional income tax and penalty in the distribution. TurboTax does not have a way to handle an uncorrected 1099-SA.
So, in your case, if the HSA custodian refuses to issue a corrected 1099-SA, you should do the following:
1. Keep all correspondence with the HSA custodian about the mistaken distribution. Try to get them to say in writing that they will not issue a corrected 1099-SA. (otherwise, keep notes and dates and times and names of all conversations in your tax files)
2. Do not enter the uncorrected 1099-SA that you received - it will just make your return wrong.
3. If you get a letter from the IRS about this issue, calmly reply with the data that you have collected, pointing out that you asked for a corrected 1099-SA and the HSA custodian refused to issue one to you (but see next paragraph).
However, if the entire distribution was returned as a mistaken distribution, then the corrected 1099-SA would be a null 1099-SA, so there would be no 1099-SA for you to enter and the IRA might not miss it at all (depends on how the IRS software is written).
The IRS says:
"As the trustee or custodian [speaking to the HSA custodian], you do not have to allow beneficiaries to return a mistaken distribution to the HSA. However, if you do allow the return of the mistaken distribution, you may rely on the account beneficiary's statement that the distribution was in fact a mistake. See Notice 2004-50, 2004-33 I.R.B. 196, Q/A-76, available at www.irs.gov/irb/2004-33_IRB/ar08.html. Do not report the mistaken distribution on Form 1099-SA. Correct any filed Form 1099-SA with the IRS and the account beneficiary as soon as you become aware of the error." (emphasis mine) (https://www.irs.gov/instructions/i1099sa)
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I made a redeposit to my HSA after receiving 1099-SA. HSA provider said they will not issue corrected 1099-SA, but will report redeposit. How do I enter redeposit in TT?
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I made a redeposit to my HSA after receiving 1099-SA. HSA provider said they will not issue corrected 1099-SA, but will report redeposit. How do I enter redeposit in TT?
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I made a redeposit to my HSA after receiving 1099-SA. HSA provider said they will not issue corrected 1099-SA, but will report redeposit. How do I enter redeposit in TT?
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I made a redeposit to my HSA after receiving 1099-SA. HSA provider said they will not issue corrected 1099-SA, but will report redeposit. How do I enter redeposit in TT?
Was the 1099-SA referring to a mistaken distribution (i.e., you took money out of the HSA but later realized that it was not for a qualified medical expense? A possible situation would be if you unexpectedly received an insurance reimbursement for something you paid for with HSA funds).
May I assume that the entire distribution reported on the 1099-SA was returned to the HSA custodian as a mistaken distribution? The HSA custodian must report a correction to the IRS and must send you a corrected 1099-SA (see the 1099-SA instructions below).
However, I see that the HSA custodian is refusing to do so. TurboTax is programmed to assume that the HSA custodian will do the proper thing and issue a corrected 1099-SA.
If you enter the original 1099-SA and correctly indicate that it was not for medical expenses, then TurboTax will calculate additional income tax and penalty in the distribution. TurboTax does not have a way to handle an uncorrected 1099-SA.
So, in your case, if the HSA custodian refuses to issue a corrected 1099-SA, you should do the following:
1. Keep all correspondence with the HSA custodian about the mistaken distribution. Try to get them to say in writing that they will not issue a corrected 1099-SA. (otherwise, keep notes and dates and times and names of all conversations in your tax files)
2. Do not enter the uncorrected 1099-SA that you received - it will just make your return wrong.
3. If you get a letter from the IRS about this issue, calmly reply with the data that you have collected, pointing out that you asked for a corrected 1099-SA and the HSA custodian refused to issue one to you (but see next paragraph).
However, if the entire distribution was returned as a mistaken distribution, then the corrected 1099-SA would be a null 1099-SA, so there would be no 1099-SA for you to enter and the IRA might not miss it at all (depends on how the IRS software is written).
The IRS says:
"As the trustee or custodian [speaking to the HSA custodian], you do not have to allow beneficiaries to return a mistaken distribution to the HSA. However, if you do allow the return of the mistaken distribution, you may rely on the account beneficiary's statement that the distribution was in fact a mistake. See Notice 2004-50, 2004-33 I.R.B. 196, Q/A-76, available at www.irs.gov/irb/2004-33_IRB/ar08.html. Do not report the mistaken distribution on Form 1099-SA. Correct any filed Form 1099-SA with the IRS and the account beneficiary as soon as you become aware of the error." (emphasis mine) (https://www.irs.gov/instructions/i1099sa)