![]() Since I will be applying the full $3900 reimbursement (received in 2022 directly back to HSA account) to qualified medical expenses incurred in 2022, I will not have to report a taxable recovery on 2022 taxes, if I understand correctly. Therefore, is the simplest solution to just use the $5500 hospital payment receipt (in 2021) as the evidence of the full costs in 2021 (since that amount was legitimate at the time), if I am audited by the IRS?īased on several previous conversations with HSA Bank, I do not think they will agree to issue me a corrected 1099-SA (but I can keep trying if that is the better way to go). Due to my daughter's ongoing medical issues, I have already paid more than $6K out of pocket for medical bills in the month of January 2022. Thank you both very much for the great information and advice. The hospital at least needs to be embarrassed over this. And it seems like something that a news organization looking for story content might want to chase down. I have been asked to pay an estimated balance before a procedure when it was scheduled in advance, and I have been billed after a procedure, but I have never been approach for money in the middle of a hospitalization. I work adjacent to the hospital industry and I have never encountered a billing person coming into the patient’s room and demanding payment while the patient is there, under care, and in such a stressful situation. This is income on your 2022 return, not 2021, because the reimbursement was paid to you in 2022.Ģ022 might be a good year to catch up on any minor medical expenses that you have been putting off, such as routine eye exams, new eyeglasses, or get your kids started on the braces that they will eventually need.Īdditionally and completely unrelated to income tax, I would also contact whatever local news channel has a “news on your side“ segment. This is a technical term for a reimbursement of a previous tax deduction, and it is contained in the “other uncommon income” section of TurboTax.įor example, if you had $1000 of medical expenses in 2022, you would report $2900 as a taxable recovery. If you don’t have medical expenses in 2022, you would report the uncovered distribution as a “taxable recovery”. Then, if you have additional medical expenses in 2022, you can count the reimbursement as being used toward those expenses. Report on your 2021 tax return that you used all of the distribution for qualified expenses. Your expenses were legitimate at the time. If they don’t accept a return, then since the reimbursement was paid to you in 2022, you don’t actually have a problem for 2021. You don’t need to wait for the corrected 1099 to file your tax return. If they accept the return, they will issue a corrected 1099-SA, and you will report the net amount as your withdrawal. So firstly, you should call the HSA bank back and see if they will accept a “return of mistaken distribution”. Looking forward to some advice, if anyone can help! Thank you! My 1099-SA includes the full $5500 in the "gross distribution" amount. Do I now have to report the excess hospital payment of $3900 as a personal distribution for 2021 (incurring income taxes and penalty), even though I got the money back in 2022? I do have receipts from the hospital for the payments totaling $5500 in 2021, but an itemized statement for only $1600 against that payment. I'm totally lost on how to handle this for 2021 taxes. I called both HSA banks and they both said they could not apply the reimbursements back to the 2021 tax year. I now have a hospital statement to cover only $1600 of the $5500 that was disbursed in 2021 (even though the remaining $3900 was refunded back to my accounts in 2022). Problem is that the payments were in 2021 and the refunds that came directly back to the HSA accounts occurred in 2022. Then they sent me an additional invoice for around $1300 at end December, which I paid in January (but not directly out of my HSA). I thought the hospital would apply my up-front payment to the actual bills, however they only kept around $1600 to cover their first invoice, and refunded the rest back to my two HSA cards in January. Turns out they just demanded the remainder of my out of pocket maximum for the year (around $5500) and I was too upset and naïve/stupid to say no or to negotiate a reasonable payment amount. Not understanding how "the system" works, I paid them out of my two HSA accounts. My daughter was hospitalized in late 2021, and the "finance lady" came around to her room to collect payment from me.
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