1099 - SA Distributions from HSA

[Yardley CPA]

Client had distribution from his HSA.  I believe the proper way to account for this is to include it on line 21. Should it also be shown as a negative on line 21 if the medical expenses exceed the distribution?  Client does itemize...so I will place the actual expenses on line 1 of Schedule A.  Client does not have enough medical expenses to exceed the 10%.  

I assume, if an individual does not itemize (and maybe even if they do), as long as the medical expenses exceed the distribution, the amount should also be shown as a negative amount on Line 21?  Am I right?

A month left in the season.  

[Possi]

TW links to the 8889 from line 25 of the 1040, where I can back the payment out with the expenses. I hope this helps.

[Yardley CPA]

Possi...was just looking at the 8889.  Thanks for clarifying that.  Appreciate it. 

[BHoffman]

HSA contributions are deducted in the year paid on line 25 of form 1040.  

HSA distributions are reported on form 8889, from form 1099SA, on line 14a.  You have to ask the client if the entire amount on 1099SA was used for qualified medical expenses.   If their answer is yes, then enter the amount on line 15 of form 8889 and you're done.  If not, then ask them how much was used for qualified med expenses and enter that amount on line 15.  The remainder will flow to line 21 and you might need to consider the additional 20% tax.  

There is no annual netting of contributions and distributions.  The HSA account prior year contributions can be used in subsequent years, so it's possible to have a larger distribution in one year than contributions in that same year.   The HSA distribution is not reported on Sch A as medical expense.  

[Lion EA]

And, those expenses do not duplicate on Schedule A.  Those expenses were paid with pre-tax monies.  They do not create a Schedule A medical deduction.  They do get reconciled on Form 8889 where they keep the corresponding amount of the HSA distribution from being taxable income. 

[Yardley CPA]

Thank you all. 

[Malissa]

On 3/18/2017 at 11:50 AM, BHoffman said:

HSA contributions are deducted in the year paid on line 25 of form 1040.  

HSA distributions are reported on form 8889, from form 1099SA, on line 14a.  You have to ask the client if the entire amount on 1099SA was used for qualified medical expenses.   If their answer is yes, then enter the amount on line 15 of form 8889 and you're done.  If not, then ask them how much was used for qualified med expenses and enter that amount on line 15.  The remainder will flow to line 21 and you might need to consider the additional 20% tax.  

There is no annual netting of contributions and distributions.  The HSA account prior year contributions can be used in subsequent years, so it's possible to have a larger distribution in one year than contributions in that same year.   The HSA distribution is not reported on Sch A as medical expense.  

Line 15 of form 8889 does not allow you to input the amount of qualified medical expenses for 2020 ATX like the 2019 did.  What is the work around?

 

[GLJEANNE]

18 minutes ago, Malissa said:

Line 15 of form 8889 does not allow you to input the amount of qualified medical expenses for 2020 ATX like the 2019 did.  What is the work around?

 

It's on the 1099-SA input, there's a field there to enter the amount.

[Abby Normal]

Just override that line. I never use the 1099SA form. I've actually linked line 15 to 14c so I only have to override total distributions on 14a and I'm done!