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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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6 Replies

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?

The redeposit was $180 for an expense that I later found out was not HSA-compliant. I redeposited it in 2018 (before 4/15), but specified it was for 2017.

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?

So was the distribution on the 1099-SA $180? If so, just ignore it as I explained in the answer. If the distribution amount was more than $180, then the HSA custodian owes you a corrected 1099-SA, as the IRS instructions below state.

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?

The total distribution on the 1099-SA is $6,400.  I will be contacting the HSA custodian for a corrected 1099-SA.  Thanks so much for your guidance!

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

JMCPA
Returning Member

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?

I'm in this same situation, my custodian WILL NOT issue me a 1099-SA, despite me explaining the IRS code. They accepted my Mistaken Distribution repayment. They say, however, that they will apply it to my 2023 1099-SA instead of a corrected FY2022 1099-SA. What can I do?

Cynthiad66
Employee Tax Expert

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?

It depends.  Did you use the Distribution for medical expenses.  If so, then do nothing because the funds were used appropriately.   Also, on the other hand,  sounds like you repaid the distribution?  If so then it is also not reportable as income.  So, at this point, if you repaid the distribution then you have no reportable income.

 

You should just wait until you receive your form 1099SA for next year and report it as the form directs.  However, if the IRS has questions about the distribution not being shown on the return you can provide explanations to the IRS at that time.  Keep all relating correspondence for proof.

@JMCPA

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