HSA ACCOUNT

[Mark52202]

What happens when I buy a product that is not covered by the HSA, but then I return the product and the money is returned to my HSA account?

Example:
I buy a camera on amazon, it costs 800 dollars.
But after 15 days I return the camera and Amazon returns the money to my HSA card.

[BillM223 · Accepted solution]

You need to contact your HSA custodian as soon as possible (like before April 18th) and ask them to treat the $800 as a Mistaken Distribution. Be nice because they don't have to do this. You will sign a form (it's probably already on their website) and send them a check for $800 (or whatever the exact amount is). For their part, if they accept the Mistaken Distribution, they will send you a corrected 1099-SA.

When you made the purchase, I am surprised that it was not flagged at the cashier because it was not for a medical expense. Please do the correction above as soon as possible because HSA custodian hate to fix things after the due date of the return.

[Opus 17]

Because you used an HSA-linked debit card, you need to contact the HSA bank to see how they treated the refund.  It should be treated as a "return of mistaken distribution" but you may need to tell them that.  There's a chance it was treated as a withdrawal and a new contribution.  

Also, is this something that happened in 2023, or did this happen in 2022 and you are preparing your 2022 tax return?   If it happened in 2022, what does your 1099-SSA say, does it include the camera cost as a withdrawal or not?  And does the bank record an extra contribution?   It might end up being a non-qualified withdrawal which is subject to penalties, but you might also have an extra contribution to report that might be deductible.  Check your account statements or call the bank. 

If this happened in 2023, you don't have to worry about reporting it for a while, but you need to contact the bank soon anyway to get it straightened out. 

[Mark52202]

THANK YOU VERY MUCH FOR YOUR ANSWER!

[Mark52202]

THANK YOU VERY MUCH FOR YOUR ANSWER!!