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Old 04-14-2008, 12:52 PM   #1
sissa51
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Join Date: Feb 2008
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hsa account
my brother has an hsa account and this year he took a distribution for medical expenses and so forth. he got a 1099sa in the mail. when he put it on his tax program it show the distribution as other income on line 21 and it also shows he owes a 10 percent penalty. does this make sense? i thought you could draw from the hsa account without no penalty and i also didnt know the withdrawl is concered taxable income
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Old 04-14-2008, 01:08 PM   #2
pricespector
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Check to see what the code is in box 3 of the 1099sa. This is the distribution code. Does he have documentation that shows it was used for medical expenses?
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Old 04-14-2008, 01:15 PM   #3
maxwell50
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Quote:
Originally Posted by sissa51
my brother has an hsa account and this year he took a distribution for medical expenses and so forth.
HSA distributions for medical expenses are tax free. HSA distributions for "so forth" may be taxable.

The tax software should ask you what your total medical expenses are for the year. If you took HSA distributions that are in excess of these total medical expenses, it is going to figure that some portion of the the HSA distributions are taxable, including the additional 10% penalty.
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Old 04-14-2008, 01:20 PM   #4
pricespector
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Well worded maxwell. Good for a chuckle. I was thinking the same thing about the "so forth" expenditures.
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