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Dhwg
Level 2

Tax amount went up for Qualified HSA Distribution

I have a 1099-SA Normal HSA Distribution amount of $7,529 which is supposed to be Tax free since it was used for allowed medical expenses...and I checked the box for using the money for Medical Expenses. But when I input the amount into TT my Taxes Due went up almost $1000.  I am confused as to why this seemed to be added to my income. Please help !

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Accepted Solutions
BillM223
Employee Tax Expert

Tax amount went up for Qualified HSA Distribution

You are saying that you have a snapshot of your return because you add the 1099-SA and another after the 1099-SA, and the only difference is that the tax is $900 higher, even though no income items changed. 

 

I am sorry but this is not possible. In order to change the tax, either an income or a deduction item had to change, or a credit was changed.

 

Are you also trying to take medical expenses on Schedule A?

 

Something else is changing...good luck in finding it...

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Critter-3
Level 15

Tax amount went up for Qualified HSA Distribution

Please use the following link to contact Customer Support for further assistance.

https://ttlc.intuit.com/community/using-turbotax/help/what-is-the-turbotax-phone-number/00/25632

 

 

 

The HSA is handled in 3 parts in the TT program ... make sure you did all three ...

 

First the contribution:

https://ttlc.intuit.com/replies/4557768

https://ttlc.intuit.com/replies/4785646

                                  

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.

https://ttlc.intuit.com/replies/4788059

 

And lastly any distribution:

https://ttlc.intuit.com/replies/4787864

View solution in original post

16 Replies
DavidD66
Employee Tax Expert

Tax amount went up for Qualified HSA Distribution

It sounds like you may not have checked the box to indicate that only used the distributions from your HSA for qualified medical expenses.  (See the attached screen shot.)  Immediately after entering an HSA, the refund meter will change, reflecting a taxable distribution.  As soon as the box is checked on the next screen, it goes back down. 

 

It is possible to take a distribution from an HSA and not spend it on medical expenses.  In this case, the distribution is taxable.  So you have to tell the IRS what you did with your distribution.  For more information on entering your Form 1099-SA, see the following Help Article:

 

Where do I enter my HSA

 

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Dhwg
Level 2

Tax amount went up for Qualified HSA Distribution

Yes, the Box for medical expenses was checked...Thanks

Dhwg
Level 2

Tax amount went up for Qualified HSA Distribution

I just did a re-do of the whole section but it still increases my Taxes by $900

BillM223
Employee Tax Expert

Tax amount went up for Qualified HSA Distribution

David described the situation correctly. The distribution will be added to Other Income (line 8 on Schedule 1 (1040)) when you enter the 1099-SA, but when you finish the subsequent screen and indicate that the whole distribution was for qualified medical expenses, TurboTax will remove the entry from line 8 and your AGI (line 11) will go back down.

 

It sounds like TurboTax has gotten some extra input that has confused it. I would encourage you to delete the 1099-SA and re-enter it.

 

Note that it is normal for the AGI to go up temporarily. The AGI goes up because the IRS considers the 1099-SA distribution to be taxable by default until you show that it was all for qualified medical expenses.

 

This is why we encourage taxpayers not to watch the Refund Meter too closely.

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Dhwg
Level 2

Tax amount went up for Qualified HSA Distribution

I took everything to fruition and there was no final reversing of all the temporary Meter Influences.  Deleted and re did it twice.  Thanks for the info but not solved yet.  Also, and for good measure, the distribution is even below our "non-deductible portion" of our current Medical deductions for the year.

BillM223
Employee Tax Expert

Tax amount went up for Qualified HSA Distribution

OK, I want to confirm that you are saying that when you enter the 1099-SA, that the amount of the distribution was added to Other Income on line 8 of Schedule 1 (1040), and that it was never removed even when you finished the HSA interview.

 

By finish, I meant that you went through all the HSA screens until the interview process brought you back to Deductions and Credits, i.e., that you did not jump out of the interview right after entering the 1099-SA.

 

Also, is the distribution on the 1099-SA,"Normal"?

 

OK, if it still doesn't work, you'll need to delete all your HSA information and start the HSA interview over again.

 

***

 

NOTE: if you see a question "What type of High Deductible Health Plan did you have any December 1, 2019?" (yes, 2019), be sure to answer "NONE".

 

1. make a copy of your W-2(s) (if you don't have the paper copies)

2. delete your W-2(s) (use the garbage can icon next to the W-2(s) on the Income screen

 

*** Desktop***

 

3. go to View (at the top), choose Forms, and select the desired form. Note the Delete Form button at the bottom of the screen.

 

*** Online ***

 

3. go to Tax Tools (on the left), and navigate to Tools->Delete a form

 

4. delete form(s) 1099-SA (if one), 8889-T, and 8889-S (if one)

5. go back and re-add your W-2(s), preferably adding them manually

6. got back to the HSA interview and go through it.

 

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Dhwg
Level 2

Tax amount went up for Qualified HSA Distribution

- I will try the "None' to the 2019 HDHP question. I put YES since we did have an HDHP in 2019 though.

- No W-2's

- Will check Line 8 after I try again

- Yes Normal Dist.

- Will verify that Forms were deleted

I will inform post with results. Thanks!

BillM223
Employee Tax Expert

Tax amount went up for Qualified HSA Distribution

Oops, I should have caught that.

 

If you had an HSA in 2019 and contributed to it, then you should answer that question truthfully.

 

If you have a spouse and your spouse did not have his/her own HSA (HSAs are owned by an individual, not jointly), then your spouse should answer "None".

 

If your spouse did have his/her own HSA in 2019 AND contributed to it, then answer the question.

 

It's just that anyone who did not have an HSA in 2019 or who did have an HSA in 2019 but did not contribute to it, should answer "None" to that question.

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Dhwg
Level 2

Tax amount went up for Qualified HSA Distribution

The extra $900 in Taxes still increases.  No Schedule-1 income added.  I deleted all forms...redid the 1099-SA...made sure spouse was None for her separate HSA (since she does not have one)...and put in only $1 for HSA contribution (even though it was $8,000) to see true effect of the "HSA Distribution" on Taxes.

BillM223
Employee Tax Expert

Tax amount went up for Qualified HSA Distribution

If the 1099-SA distribution did not appear on line 8 on Schedule 1 (1040), then something else is happening, and we've been barking up the wrong tree.

 

You will have to look carefully at your 1040 and its three schedules (1, 2, and 3) and see what changes to cause this increase in tax, because it isn't your 1099-SA distribution.

 

So what changed besides your tax? What income or deduction item?

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Dhwg
Level 2

Tax amount went up for Qualified HSA Distribution

I have been looking, Can't find anything...Argh. The only tie-in I can think of is a glitch where TT sees only the "Deductible" portion of Med. Deductions and thinks that I cannot take a Tax-Free distribution from that portion (even though I am reimbursing myself for prior year Med. expenses).

BillM223
Employee Tax Expert

Tax amount went up for Qualified HSA Distribution

You are saying that you have a snapshot of your return because you add the 1099-SA and another after the 1099-SA, and the only difference is that the tax is $900 higher, even though no income items changed. 

 

I am sorry but this is not possible. In order to change the tax, either an income or a deduction item had to change, or a credit was changed.

 

Are you also trying to take medical expenses on Schedule A?

 

Something else is changing...good luck in finding it...

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**Mark the post that answers your question by clicking on "Mark as Best Answer"
Dhwg
Level 2

Tax amount went up for Qualified HSA Distribution

Well I found it (thanks to your help!)...Schedule A Line 1 was reduced but the Distribution amount.  But that can't be right since it would be robbing me of my current Medical Deductions and the Tax-Free reimbursement of prior year accumulated Med. expenses!!!

Critter-3
Level 15

Tax amount went up for Qualified HSA Distribution

Please use the following link to contact Customer Support for further assistance.

https://ttlc.intuit.com/community/using-turbotax/help/what-is-the-turbotax-phone-number/00/25632

 

 

 

The HSA is handled in 3 parts in the TT program ... make sure you did all three ...

 

First the contribution:

https://ttlc.intuit.com/replies/4557768

https://ttlc.intuit.com/replies/4785646

                                  

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.

https://ttlc.intuit.com/replies/4788059

 

And lastly any distribution:

https://ttlc.intuit.com/replies/4787864

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