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Tax Halp!!!

fishonjazz

fishonjazz

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So I was doing my taxes myself online (only 1 W-2 and i dont have anything to itemize so my taxes are easy to do) and things were going fine until I was asked to enter my 1099-SA information (this is for my HSA) and then after I entered that info my refund plummeted by like 1,000 bucks. HSA is tax free and shouldn't hurt my tax situation in any way as far as I understand it so I stopped and decided to go to a professional.
Well the same thing happened when the pro did my taxes. Right when he entered the HSA information my refund decreased by like 1,000 dollars. Well I had to run home and get a medical bill as proof that my daughter is my dependent and while I was home I decided to use the google to look into this HSA stuff. Google confirmed what I already believed. On my 1099-SA form in box 3 (distribution code) I have a 1. A 1 in that box indicates normal TAX FREE distributions were made from my HSA.

From google: As needed you can take tax-free distributions from your account to pay for qualified medical expenses of the account of a beneficiary or the beneficiaries spouse or dependents. You will receive a 1099-SA form that shows the total amount of your annual distributions reported in box 1. Provided you only use the funds to pay qualified medical expenses, box 3 should show the distribution code No. 1, which indicates normal TAX FREE distributions.

So I told my tax guy to leave that HSA info out of my taxes because im not supposed to be taxed for those distributions since its all non taxable income and he said he would do that but he wrote up a legal document and made me sign it saying that he wanted to include info from that form in my taxes but I told him not to so that the IRS couldn't come after him.

So I feel like if I file my taxes without that 1099-SA info I will be committing tax fraud, which I dont want to do, but if I include that info then I get taxed on non taxable HSA use which I feel is tax fraud against me.

What the heck is going on and what should I do about this?
 
It sounds like the HSA amount is being added to your taxable income, which like you said shouldn't be happening. After reading this, https://turbotax.intuit.com/tax-tip...rcher-msa-or-medicare-advantage-msa/L2IwVaB9X, my best guess would be that perhaps the HSA expenses aren't being listed as qualified for some reason. Is there perhaps some other line on the tax form where you have to state not only the amount of the HSA expenses but the amount which were qualified expenses?

I think you're right not to file until you get this figured out, but you're also right not to file without the HSA info. Good luck!
 
colton said:
It sounds like the HSA amount is being added to your taxable income, which like you said shouldn't be happening. After reading this, https://turbotax.intuit.com/tax-tip...rcher-msa-or-medicare-advantage-msa/L2IwVaB9X, my best guess would be that perhaps the HSA expenses aren't being listed as qualified for some reason. Is there perhaps some other line on the tax form where you have to state not only the amount of the HSA expenses but the amount which were qualified expenses?

I think you're right not to file until you get this figured out, but you're also right not to file without the HSA info. Good luck!
Click to expand...

Thanks. Ya it was definitely being added to my taxable income. The tax did tell me that.
I just don't know how to remedy that. I couldn't see any other way to list it and the code on the 1099-SA is correct.
I think I'm just going to have to call the IRS. Which will probably have me on hold forever this time of year.

Sent from my ONEPLUS A6013 using JazzFanz mobile app
 
One Brow said:
Is there a cap on HSA tax-free deposits? You might be going over that cap.
Click to expand...
Yes there is but my insurance provider doesn't even allow me set up my deposits for more than that limit.
I only put like 2,000 dollars into my HSA last year.

I really think that the issue I'm having is a software issue. Which means I might have to go have my taxes done again somewhere else and pay to get my taxes done twice or something.

Sent from my ONEPLUS A6013 using JazzFanz mobile app
 
fishonjazz said:
Thanks. Ya it was definitely being added to my taxable income. The tax did tell me that.
I just don't know how to remedy that. I couldn't see any other way to list it and the code on the 1099-SA is correct.
I think I'm just going to have to call the IRS. Which will probably have me on hold forever this time of year.

Sent from my ONEPLUS A6013 using JazzFanz mobile app
Click to expand...
Call in the morning and they will give you an option (usually) to call you back. Don't call in the later afternoon, if the wait goes past closing time, they disconnect you.

Are you using a software program to do this (Turbotax, etc?) If so, check the other income box on your tax return, if it populates with the amount of your HSA distribution, see if you can remove it. Also, box 3 should just have a 1 not a 1a.

Also, I highly recommend including a note with your return asking for your refund in gold!
 
2 things really piss me off about this for you fishbro:

1) There should be NO NEED for an HSA in the first place. Our medical system should be affordable enough that you don't have to earmark such a large part of your check up front and manage it on your own. Should be part of our healthcare system in the first place.

2) You should not have to file a tax return. The government has the capability to generate your tax return for you and send it to you, then you would file only if you have stuff to declare or claim outside of your W2 and basic tax documents. In fact the IRS already generates a pro forma return for everyone, at least it generates the numbers against what you submit, which is how they know if you got something wrong. Which makes it double-stupid that you can get in trouble if you don't understand the insanely complex tax code and you accidentally mess something up when they could just generate it for you. And this would actually save taxpayers a large amount of money every year and make for a more balanced tax overall. But they won't change due to the tax preparer lobby, which is way way bigger than most people realize.

Wish I had a good answer for your bro. If I were you I would go to a different tax guy, sounds like your guy is only knowledgeable about the most basic stuff, like he is one of the dudes that works at the walmart pop-up. Find a real tax guy. Might cost you a few hundred but that is better than owing a grand after all is said and done.

Good luck!
 
I’m a tax guy but not into individual taxes. One thing I’ve learned with these stupid programs is there very well could be a box that is not checked or some other input that is making the HSA taxable. They are pretty good for the most part but may struggle with a few of these less common things. The “pro” may not know how to fix it.

I wouldn’t worry too much about it being fraud. They may hit you with an automated bill for the tax plus penalty if they think it’s an error.
 
LogGrad98 said:
2 things really piss me off about this for you fishbro:

1) There should be NO NEED for an HSA in the first place. Our medical system should be affordable enough that you don't have to earmark such a large part of your check up front and manage it on your own. Should be part of our healthcare system in the first place.

2) You should not have to file a tax return. The government has the capability to generate your tax return for you and send it to you, then you would file only if you have stuff to declare or claim outside of your W2 and basic tax documents. In fact the IRS already generates a pro forma return for everyone, at least it generates the numbers against what you submit, which is how they know if you got something wrong. Which makes it double-stupid that you can get in trouble if you don't understand the insanely complex tax code and you accidentally mess something up when they could just generate it for you. And this would actually save taxpayers a large amount of money every year and make for a more balanced tax overall. But they won't change due to the tax preparer lobby, which is way way bigger than most people realize.

Wish I had a good answer for your bro. If I were you I would go to a different tax guy, sounds like your guy is only knowledgeable about the most basic stuff, like he is one of the dudes that works at the walmart pop-up. Find a real tax guy. Might cost you a few hundred but that is better than owing a grand after all is said and done.

Good luck!
Click to expand...
Good post and you are spot on about the tax guy I went to.

Sent from my ONEPLUS A6013 using JazzFanz mobile app
 
LogGrad98 said:
2 things really piss me off about this for you fishbro:

1) There should be NO NEED for an HSA in the first place. Our medical system should be affordable enough that you don't have to earmark such a large part of your check up front and manage it on your own. Should be part of our healthcare system in the first place.

2) You should not have to file a tax return. The government has the capability to generate your tax return for you and send it to you, then you would file only if you have stuff to declare or claim outside of your W2 and basic tax documents. In fact the IRS already generates a pro forma return for everyone, at least it generates the numbers against what you submit, which is how they know if you got something wrong. Which makes it double-stupid that you can get in trouble if you don't understand the insanely complex tax code and you accidentally mess something up when they could just generate it for you. And this would actually save taxpayers a large amount of money every year and make for a more balanced tax overall. But they won't change due to the tax preparer lobby, which is way way bigger than most people realize.

Wish I had a good answer for your bro. If I were you I would go to a different tax guy, sounds like your guy is only knowledgeable about the most basic stuff, like he is one of the dudes that works at the walmart pop-up. Find a real tax guy. Might cost you a few hundred but that is better than owing a grand after all is said and done.

Good luck!
Click to expand...
I don't disagree, but a better employer would see a HDHP as an opportunity to pass on premium savings to employees through the HDHP. I have a **** ton of money in my HSA due to limited health issues. Many employers offer a traditional plan or an HDHP with employer contributions. Without an HDHP I would have thrown that $ into premiums for benefits I didn't need...

And if you get older or have health issues, you can switch to a regular plan and still use hsa funds (just can't contribute more).

And you can take funds out at retirement for any use with no penalty.

I max my roth 401k and hsa every year. Invest in gold!
 
Gameface said:
I really feel like these folks basically just fill out their own version of TurboTax for you while you sit there.
Click to expand...
Agreed 100%.
That's why I usually just do them myself.

Sent from my ONEPLUS A6013 using JazzFanz mobile app
 
Gameface said:
I really feel like these folks basically just fill out their own version of TurboTax for you while you sit there.
Click to expand...
Most have like 3 weeks of training... the idea is the software does the work... which for the most part it does.
 
fishonjazz said:
Yes there is but my insurance provider doesn't even allow me set up my deposits for more than that limit.
I only put like 2,000 dollars into my HSA last year.

I really think that the issue I'm having is a software issue. Which means I might have to go have my taxes done again somewhere else and pay to get my taxes done twice or something.

Sent from my ONEPLUS A6013 using JazzFanz mobile app
Click to expand...

Im sure Ms Serp would do them free for you. Would only take like 15 minutes. Lemme know if you’re interested.
 
fishonjazz said:
So I was doing my taxes myself online (only 1 W-2 and i dont have anything to itemize so my taxes are easy to do) and things were going fine until I was asked to enter my 1099-SA information (this is for my HSA) and then after I entered that info my refund plummeted by like 1,000 bucks. HSA is tax free and shouldn't hurt my tax situation in any way as far as I understand it so I stopped and decided to go to a professional.
Well the same thing happened when the pro did my taxes. Right when he entered the HSA information my refund decreased by like 1,000 dollars. Well I had to run home and get a medical bill as proof that my daughter is my dependent and while I was home I decided to use the google to look into this HSA stuff. Google confirmed what I already believed. On my 1099-SA form in box 3 (distribution code) I have a 1. A 1 in that box indicates normal TAX FREE distributions were made from my HSA.

From google: As needed you can take tax-free distributions from your account to pay for qualified medical expenses of the account of a beneficiary or the beneficiaries spouse or dependents. You will receive a 1099-SA form that shows the total amount of your annual distributions reported in box 1. Provided you only use the funds to pay qualified medical expenses, box 3 should show the distribution code No. 1, which indicates normal TAX FREE distributions.

So I told my tax guy to leave that HSA info out of my taxes because im not supposed to be taxed for those distributions since its all non taxable income and he said he would do that but he wrote up a legal document and made me sign it saying that he wanted to include info from that form in my taxes but I told him not to so that the IRS couldn't come after him.

So I feel like if I file my taxes without that 1099-SA info I will be committing tax fraud, which I dont want to do, but if I include that info then I get taxed on non taxable HSA use which I feel is tax fraud against me.

What the heck is going on and what should I do
Click to expand...

fishonjazz said:
So I was doing my taxes myself online (only 1 W-2 and i dont have anything to itemize so my taxes are easy to do) and things were going fine until I was asked to enter my 1099-SA information (this is for my HSA) and then after I entered that info my refund plummeted by like 1,000 bucks. HSA is tax free and shouldn't hurt my tax situation in any way as far as I understand it so I stopped and decided to go to a professional.
Well the same thing happened when the pro did my taxes. Right when he entered the HSA information my refund decreased by like 1,000 dollars. Well I had to run home and get a medical bill as proof that my daughter is my dependent and while I was home I decided to use the google to look into this HSA stuff. Google confirmed what I already believed. On my 1099-SA form in box 3 (distribution code) I have a 1. A 1 in that box indicates normal TAX FREE distributions were made from my HSA.

From google: As needed you can take tax-free distributions from your account to pay for qualified medical expenses of the account of a beneficiary or the beneficiaries spouse or dependents. You will receive a 1099-SA form that shows the total amount of your annual distributions reported in box 1. Provided you only use the funds to pay qualified medical expenses, box 3 should show the distribution code No. 1, which indicates normal TAX FREE distributions.

So I told my tax guy to leave that HSA info out of my taxes because im not supposed to be taxed for those distributions since its all non taxable income and he said he would do that but he wrote up a legal document and made me sign it saying that he wanted to include info from that form in my taxes but I told him not to so that the IRS couldn't come after him.

So I feel like if I file my taxes without that 1099-SA info I will be committing tax fraud, which I dont want to do, but if I include that info then I get taxed on non taxable HSA use which I feel is tax fraud against me.

What the heck is going on and what should I do about this?
Click to expand...
What line are u reporting 1099-SA? There isn't a specific one on the 1040, and no mention of 1099-SA in the 111 page instructions.

Make sure you fill out Form 8889 documenting. Follow the instructions to carry over to Schedule 1 additional income, then take that over to your 1040. The distributions and credits should cancel out to show no additional income.

Not sure why a tax pro couldnt figure this out. It took me ten minutes of looking over the forms.
 
Also, google free fillable forms. The IRS directs you to free tax places if you are under the income threshold, but also has a self serve program for those over or who want to do their own. I've used the latter the past two years and have been satisfied. They have a do the math button for each form, and the necessary numbers have carried from form to form correctly. Cuts down on transcribing errors. In this case, you would use the add button on the 1040 to add a Schedule 1, add on that form to get 8889, then the numbers would be added from Form 8889 to S1 to 1040 for you.
 
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