Used 2022 HSA to cover 2021 expenses

[sle7]

I used all of my 2022 HSA to cover 2021 expenses so I want to deduct my actual 2022 medical expenses.  However, I think turbotax thinks my 5000 contribution went to 2022's expenses. How can I fix that?

[MarilynG1]

If you entered 2022 Medical Expenses, you are correct that TurboTax automatically deducts your 2022 HSA from those expenses.

To get around this, enter the amount of  2021 expenses you paid with your 2022 HSA as a 'Medical Expense'.  That when when TurboTax subtracts the HSA, your 2022 Medical Expenses will be correct.

Here's more info on Using HSA for Prior Year Expenses. 

@sle7 

[dmertz]

It's not clear what you mean by "my 2022 HSA."  Be aware that qualified medical expenses eligible to be paid from an HSA are only those incurred after the establishment of the HSA, which is generally the day on which the HSA is first funded.  If your HSA was first established in 2022, distributions from this HSA cannot be applied to 2021 medical expenses.

But MarilynG1 is correct, if in 2022 you paid qualified medical expenses incurred in 2021 after the establishment of your HSA, you need to include those expenses when in the medical-expense-deduction section TurboTax asks you to enter your medical expenses.

[looney1300]

I have the same issue, though, in detail, turbotax doesn't seem to like. I understand your solution, however, where should I put the 2021 expense? Do all the categories turbotax asks about under medical expenses just get aggregated to one number? If so, then I should just add it under the other I would suppose... Any thoughts?

[BillM223]

Yes, create an entry under Miscellaneous medical expenses equal to the amount of the 1099-SA distributions (box 1). Just call it, "Adjustment for HSA distribution." As you see, it doesn't matter which year this is for (although dmertz is right that you need to make sure that any amounts that you covered from your HSA were incurred after you first funded your HSA). 

You do this because TurboTax automatically subtracts the HSA distributions from the medical expenses, as if your HSA distribution was a kind of (insurance) reimbursement.

As Marilyn noted, if you don't do this, your 2022 medical deduction on Schedule A will be short by the amount of the HSA distribution.