1099-SA for HSA increased my taxes despite Only used for Medical Expenses

Forum|Forum|2 years ago
February 9, 2024
1 reply
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I just turned 65 this past March and am now on Medicare but I am using my HSA from my employer to pay my medical bills.

I put into Turbo Tax my distributions and it raised my Federal Taxes by A LOT, even though I checked 'only used for medical expenses'???????

Is there something special about turning 65 that made it suddenly taxable? The whole questions about 'do i have a HDHP currently threw me off as i have medicare now and don't contribute to my HSA anymore, it is just sitting there in an account to spend. I must be missing something?

Best answer by himandherr

Thank you - I found my problem. You were 100% correct that it wasn’t that I was being taxed on my HSA that was causing my jump in taxes due. All your information on line items to check was awesome!

My issue was I had put in earlier all my medical deductions and when I then put in my HSA contributions it deducted that amount from my medical deductions and hence raised my tax base. A sad realization on my part but the way it works.

Thank you for your help!

LeticiaF1

If your HSA distribution, money spent from your HSA account, was used to pay for qualified medical expenses it is non-taxable.

HSA distributions used for anything other than qualified medical expenses are not only taxable, they're subject to an additional 20% penalty if you're not disabled or are under the age of 65.

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. The 20% additional penalty, if applicable, will show up on line 17b of your 8889 and Schedule 2, line 8.

Go through your entries and make sure all the answers you entered are correct.

Where do I enter my 1099-SA?

himandherrAuthorAnswer

Thank you - I found my problem. You were 100% correct that it wasn’t that I was being taxed on my HSA that was causing my jump in taxes due. All your information on line items to check was awesome!

Thank you for your help!

dmertz

Employee

When entering your medical expense under Deductions & Credits, make sure that you have included in your medical expenses paid with the HSA because TurboTax will subtract those back off to determine that ones that can be claimed on Schedule A.