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Author: Pushkinator Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121169  
Subject: HSA tax forms Date: 10/7/2012 4:35 PM
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I have received a notice from the IRS regarding my 2010 taxes and I am trying to determine where I went wrong. Any insight is appreciated.

I received 1099-SA from my HSA bank. Box 1 is $2,625.17 and box 3 distribution code is 1. The IRS notice I received says that I failed to report $2,625.17 in income.

I did not receive a direct distribution from my HSA in 2010 (or any year). That actually is the amount spent on health care in 2010. Since the account is on Quicken I can print the report from that year to show my 2010 expenditures were $2,625.17.

I know those expenditures should not be taxable, but I cannot determine where is the mistake. Did the bank send the wrong form or the wrong distribution code? I switched banks in 2011 and I noticed the new bank sent a form 5498-SA, which does not reference distributions.
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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 116759 of 121169
Subject: Re: HSA tax forms Date: 10/7/2012 5:15 PM
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I know those expenditures should not be taxable, but I cannot determine where is the mistake.

It sounds like you forgot to report the distribution (and your qualified expenses) on Form 8889. If that's the case prepare one now and send it with your response to the notice.

Did the bank send the wrong form or the wrong distribution code? I switched banks in 2011 and I noticed the new bank sent a form 5498-SA, which does not reference distributions.

The 1099 reports distributions; the 5498 contributions.

See Pub 969.

For general reference, the quickest way to resolve most "what do I do with this?" questions about 1099's is to turn them over and read the back. Second line of defense is early on in the 1040 instructions, which includes several pages on information documents (by number) and what to do with them.

Phil
Rule Your Retirement Home Fool

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Author: Pushkinator Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 116760 of 121169
Subject: Re: HSA tax forms Date: 10/7/2012 5:26 PM
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Thanks. I will look at that.

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Author: Pushkinator Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 116762 of 121169
Subject: Re: HSA tax forms Date: 10/8/2012 9:01 AM
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You were correct. I will amend. I appreciate your prompt response.

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