turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

Why is my 1099-SA reimbursement for previous years medical subtracted from my current 2020 medical expense since I am trying to itemize vs using standard deduction

I am retired and have an HSA and this year I requested reimbursements for previous years qualified medical expenses.  It is not for reimbursement of current year medical expenses that I wanted to use to itemize vs standard deduct.  Turbo assumes i was reimbursed current year medical (not previous years) and subtracts from current year medical expense.   
But
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

4 Replies
BillM223
Expert Alumni

Why is my 1099-SA reimbursement for previous years medical subtracted from my current 2020 medical expense since I am trying to itemize vs using standard deduction

Yes, this is a peculiarity of the IRS rules that say that you can take HSA reimbursements for prior year medical expenses (so long as the expenses were incurred after the date that the HSA was credited). They really didn't design Schedule A to accommodate this.

 

In this case, enter a miscellaneous medical deduction (at the end of the Medical and Dental interview) called "Adjustment for prior year HSA distribution" and enter the dollar amount of the amount HSA distribution for the prior year expense. This will return your total medical expenses to the correct number as if the HSA distribution was not subtracted out.

 

This will not print on Schedule A so  just make a note to yourself why you did this and save it in your tax file if anyone ever asks (unlikely).

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

Why is my 1099-SA reimbursement for previous years medical subtracted from my current 2020 medical expense since I am trying to itemize vs using standard deduction

I disagree with Bill that the problem is the IRS. The problem is TurboTax, which assumes that taxpayers are idiots.  TurboTax doesn’t just ask you to list all of your deductible medical expenses. TurboTax asks you to list all of your medical expenses, and then to list all of your tax free reimbursements such as health insurance, and then TurboTax automatically subtracts your HSA reimbursements whether they were for the current year or not, and then TurboTax does the calculation to determine the remaining amount of medical expense deduction.

 

I agree that the remedy is to add an additional medical expense to offset the amount of the HSA reimbursements that were for prior year medical expenses.

 

However, if you took a tax deduction for those medical expenses in the prior year and received a tax benefit from the deduction, the fact that you are now obtaining reimbursement from an HSA makes the HSA reimbursement taxable income to you as a taxable recovery, which is another name for a reimbursement of a previous deduction.  You can’t both take a tax deduction for an expense and also be reimbursed tax free for that expense, even if the reimbursement crosses a tax year.   If you must enter the reimbursements as a taxable recovery, that is under the “other income“ or “uncommon income“ section of the program.  If you did not take a tax deduction for your medical expenses in the previous year, then you do not have a taxable recovery.

Why is my 1099-SA reimbursement for previous years medical subtracted from my current 2020 medical expense since I am trying to itemize vs using standard deduction

Thank you for this reply; I found it helpful.  I have the identical situation.  Would the adjustment that you described be placed in the 'Tell us about any other medical expenses' category?  Thank you in advance for your help.

Why is my 1099-SA reimbursement for previous years medical subtracted from my current 2020 medical expense since I am trying to itemize vs using standard deduction


@cdenorch wrote:

Thank you for this reply; I found it helpful.  I have the identical situation.  Would the adjustment that you described be placed in the 'Tell us about any other medical expenses' category?  Thank you in advance for your help.


If you want to add an expense from 2022, that you reimbursed in 2023, that would be the right place to put it. 

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies