Non taxable HSA distribution is added to taxable on Sch 1

Forum|Forum|4 years ago
March 27, 2022
4 replies
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I have a client that had a HSA distribution on a 1099SA and used it all of qualified medical expense. On the 8889-S, line 16 shows a "0" taxable amount and says to enter on Sch 1, line 8e. When I go to Sch 1 line 8e, it should the whole distribution as taxable. What am I doing wrong? Thanks.

P.S. I did search this topic but all the info was from 2019 and not useful.

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Best answer by dascpa

On the 1099-SA Worksheet did you check distribution code 1, and mark the two boxes for HSA and full amount in box 1 was used for qualified medical expenses? That will make the 8889-T or S tax-free.

dascpaAnswer

Level 11

On the 1099-SA Worksheet did you check distribution code 1, and mark the two boxes for HSA and full amount in box 1 was used for qualified medical expenses? That will make the 8889-T or S tax-free.