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The HSA Bank closed my account for inactivity. I subsequently received the funds that were in my HSA account. They issued you me a 1099-sa. How do I report these funds?

I'm using Turbo Tax Delux.  NOT the online version.

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3 Replies

The HSA Bank closed my account for inactivity. I subsequently received the funds that were in my HSA account. They issued you me a 1099-sa. How do I report these funds?

First, you have 60 days to rollover the entire amount into a new HSA, if you want to preserve the tax-free status of the money.  Many banks will allow you to open an HSA, they may charge a few dollars a month maintenance fee.  You can also contribute new money to an HSA as long as you are enrolled in a qualifying health insurance plan, even if your employer doesn't offer an HSA as a benefit.  (Just make sure you really are enrolled in an HSA eligible insurance plan and aren't covered by any other insurance such as a spouse's insurance or FSA.)

If you don't roll the money over into a new HSA, then any amount NOT spent on qualified health care in the year you received the money is subject to regular income tax plus a 20% penalty.

Simply enter the 1099-SA on your tax return in appropriate section and answer the follow up questions.  (Did you spend it on qualified medical costs, did you roll it over, etc.)  Turbotax will assess the tax and penalty.

The HSA Bank closed my account for inactivity. I subsequently received the funds that were in my HSA account. They issued you me a 1099-sa. How do I report these funds?

Not sure why this would qualify as income.
1) All contributions were made prior to 2014
2) All contribution were made by me with taxed income
3) No deduction was taken for the contributions
Does this effect the reporting?

The HSA Bank closed my account for inactivity. I subsequently received the funds that were in my HSA account. They issued you me a 1099-sa. How do I report these funds?

If the contributions were made via payroll deduction, I'm sure they were tax-free because they were not included in your taxable income on your W-2.  And if you contributed after-tax (out of pocket) to an HSA and did not take the tax deduction, that's your fault.  Any money is an HSA is taxable when you withdraw it plus a 20% penalty unless spent on qualified medical expenses.
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