An HSA distribution—money spent from your HSA account—is nontaxable as long as it's used to pay for qualified medical expenses. After you enter your 1099-SA, we'll ask Did you spend all the money you took out on medical expenses? If you answer Yes, the entire distribution in box 1 of your 1099-SA is nontaxable.
However, if you answer No, the portion that wasn't used for qualified medical expenses becomes taxable income. This income appears on Form 8889, line 16 and Schedule 1, line 8.
Other Income or Loss reported on the screen Here's a picture of your 2023 Income, is calculated on Schedule 1 part I
Review Schedule 1 part I line 9.
To preview form 1040 and schedule 1:
- Open or continue your return.
- Select Tax Tools from the menu (if you don't see this, select the menu icon in the upper-left corner).
- Select Tools.
- Next, select View Tax Summary in the pop-up,
- Select Preview my 1040 in the left menu.
- Scroll down to view schedule 1.
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