HSA Distribution used for Surgery

[mvipat]

We have been contributing to HSA over the years this year we used the money for surgery.  This year we contributed $2000 for the whole year while for surgery and other medical expense we used $2998.97. The total balance in the account has been more than $6000 as years of contribution. Do I need to pay tax for this?

[MinhT1]

No.

If you used your HSA distributions for medical expenses, the distribution is not taxable and there is no penalty.

Please read this IRS document for more information.

[mvipat]

That was my understanding too, but as soon as I enter 1099-SA I received from employed and responding to this question 

Did you spend your HSA money on medical expenses only? - Yes

The tax due increases. Is this a bug in turbotax?

[mvipat]

I deleted and entered all the amounts and the Federal tax due remained same. My understanding was wrong.

[AnnetteB6]

It could have been that something else triggered the change in your balance due.  Take a look at your Form 1040 Schedule 1 line 8f.  If your Health Savings Account (HSA) distribution is being included as taxable income, that line is where it is reported.  

To preview your Form 1040 using TurboTax Online, use the following steps while working in your tax return:

• In the navigation area on the left side of your screen, click Tax Tools to expand your choices
• Click Tools, which will open the Tool Center
• Click View Tax Summary under “Other Helpful Links…”
• Click  Preview My 1040 on the left side of your screen to see your actual tax form

If you are using one of the desktop versions of TurboTax, click the Forms button in the upper right corner of the screen to go to Forms Mode where you can view Form 1040 or any other form that is included as part of your return.  Once you are in Forms Mode, click the form name in the list on the left side of the screen.

@mvipat