I have 17600 in medical expenses for 2018 and contributed 4400 to my HSA with 4462 in distributions reported on my 1099-SA, all of which were spent on qualified medical expenses. I have a qualified high-deductible insurance plan (5750/yr) thru the exchange. After entering my medical expenses but prior to entering the 1099-SA, my refund in TurboTax showed as 5121. Then when entering the 1099 SA, after adding the 4462 in distributions but before telling it that it was all for qualified medical expenses, the refund dropped to 2934... OK so far. But, after saying they were all for qualified expenses, the refund went up to only 3912, and there it stays.
So, I established an HSA to get a tax break, not tax penality. Why did my refund go down from 5121 rather than up from 5121?
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BTW - I'm retired so all my contributions were from me, not an employer.
You can only get one tax break from using an HSA. So entering your 1099-SA distributions will remove the same amount of your itemized medical expenses for consideration. You can't deduct it twice in other words.
Thanks Paula... yes I understand that; my reported medical expenses dropped from 17600 (of which approx 11200 are ACA premiums) to 13200. But since I'm above the 7.5% AGI threshhold for medicals (4754 in my case), shouldn't entering the 1099-SA just effectively represent a shift of deduction from "Medical Expenses" to "HSA disbursements for qualified medical expenses" resulting in little or no change in refund? So, how come when I pay 4400 out of my pocket to an HSA and then pay 4400 worth of qualified medical expenses from it, versus paying 4400 for medical expenses out of my pocket directly, my refund goes down by 25%?
So I just created preliminary forms for both situations; prior to entering the 1099-SA and after. And the prior, despite not having the 1099-SA still has a form 8889 for 4400! Not sure when or where I entered this.... I made sure to check "No HSA" when creating the first PDF. I thought this info only came from the 1099-SA (where else is it entered?). So indeed, I was inadvertently double-dipping as this 4400 was not getting subtracted from my medical expenses of 17600 *and* was getting subtracted at line 37 until I re-entered the 1099-SA.
Did you enter ALL of your medical expenses, including the 1099-SA amount? The $17,600 amount? If not, go back and enter all expenses, or enter as a miscellaneous 'HSA expenses' in the medical section. TurboTax will subtract from the total.
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