Since I'm only transferring the HSA account, and didn't actually use any of the money, there shouldn't be any tax consequences. But when I enter the 1099SA form into Turbo Tax and code it as "normal distribution" (per 1099SA form), it increases the amount of tax due. What should I do? Can I just not report it since it's not an actual distribution?
The Form 1099-SA must be entered and Form 8889 must be included with your tax return. In the follow-up to entering the Form 1099-R, you must indicate that you did not use all of the distribution for medical expenses, then indicate the amount used for medical expenses and the amount rolled over to another HSA. Neither of these amounts will be subject to income tax or penalty. The amount rolled over must appear on Form 8889 line 14b.
The Form 1099-SA must be entered and Form 8889 must be included with your tax return. In the follow-up to entering the Form 1099-R, you must indicate that you did not use all of the distribution for medical expenses, then indicate the amount used for medical expenses and the amount rolled over to another HSA. Neither of these amounts will be subject to income tax or penalty. The amount rolled over must appear on Form 8889 line 14b.