First time receiving a 1099-SA Form - confused about HSA tax reporting

Thanks for this info! I'm also new to HSAs and have a question - what happens if I accidentally used some HSA funds for non-medical expenses? I think I might have used my HSA card at the pharmacy but bought some non-medical items too.

If you used HSA funds for non-qualified expenses, those amounts will be considered taxable income. You'll also face a 20% penalty tax on those non-qualified withdrawals if you're under 65. On Form 8889, you'll need to separate your qualified medical expenses from non-qualified withdrawals. For mixed purchases like at a pharmacy where you bought both medicine (qualified) and something like snacks (non-qualified), you should technically only use HSA funds for the qualified portion. If you've already used HSA funds for non-qualified items, you can "correct" this by withdrawing the equivalent amount from regular funds and keeping detailed records of the correction.

How does it handle rollovers from previous HSAs? I consolidated two accounts last year and I'm worried about reporting it correctly.

Sounds interesting, but does it actually file your taxes for you or just help with the HSA part? I'm wondering if I'd still need to use another service to actually submit.

It handles rollovers perfectly - you just need to indicate which distributions were rollovers on your 1099-SA, and it properly codes them so they're not treated as taxable distributions. The system knows the difference between actual medical spending and account transfers. For the second question, it handles the complete tax filing process. You can upload all your tax documents (W-2s, 1099s, etc.), not just HSA forms, and it prepares and files your entire return including federal and state. It specifically doesn't charge extra for HSA forms unlike some other services.

It uses an automated system that continually redials the IRS using their priority routing numbers and holds your place in line. When it gets through, you get a call back and are connected directly to the agent. It's basically doing the frustrating redial process for you instead of you having to spend hours trying. The IRS phone system has major capacity issues, especially during tax season. They literally can't handle the call volume, so they disconnect callers once their hold queues are full. This service just keeps trying until it gets into the queue, then secures your spot. It's not doing anything you couldn't theoretically do yourself, but most people don't have hours to keep redialing.

Wait, how does this actually work? I've tried calling the IRS for weeks and just get disconnected. Why would this service be able to get through when nobody else can?

Sounds like a scam tbh. Why would anyone need a service to call a government agency? They're probably just taking your money to do something you could do yourself if you were persistent enough.

It uses an automated system that continually redials the IRS using their priority routing numbers and holds your place in line. When it gets through, you get a call back and are connected directly to the agent. It's basically doing the frustrating redial process for you instead of you having to spend hours trying. The IRS phone system

Do you need to enter each medical expense individually or just the total? I have like 20+ different expenses from throughout the year.

You only need to enter the total qualified medical expenses, not each individual expense. The tax forms only care about the aggregate amount used for qualified medical expenses, not the itemized breakdown. Just make sure you keep all your receipts and records of those individual expenses in your personal files. The IRS doesn't need to see each expense when you file, but if you ever get audited, you'd need to provide documentation for each qualified medical expense you claimed.

Not a stupid question at all! The amounts don't necessarily need to match. The 1099-SA reports the total distributions from your HSA, regardless of how you used the money. If you withdrew more than you spent on qualified medical expenses, you have a few options: 1. If you have other unreimbursed medical expenses from the year, even ones you paid from your regular bank account, you can "retroactively" consider those covered by your HSA distribution 2. You can return the excess distribution to your HSA if you're still within the time limit (usually before tax filing deadline) 3. If neither applies, you'll need to report the difference ($325 in your case) as a non-qualified distribution, which would be subject to income tax plus a 20% penalty

This is good to know! I have contributions coming out of my paycheck - are those considered employer contributions or employee contributions? And should they show on my W2 somewhere?

Contributions made through payroll deduction are considered employee contributions, even though they're taken out before taxes. They should appear on your W-2 in Box 12 with code W. This means they've already been excluded from your taxable wages in Box 1. If your employer makes additional contributions beyond what comes out of your paycheck, those are employer contributions. Both types will be reported on Form 5498-SA which you usually receive in May (after tax filing season), but you don't need to wait for that form to file your taxes.