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HSA savings account & tax question?

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HSA savings account & tax question?

Postby farnleigh40 » Tue Oct 01, 2013 5:52 am

i use an HSA savings account to pay for out-of-pocket medical expenses through out the year because i have a qualifying healthcare plan. at the end of the year my bank sends me a form showing how much i've paid out in med bills and i turn it over to the guy who does my taxes.
my question is...let's say for some reason i pay some doctor bills with a check or cash instead of my HSA card. in this case the money i used to pay the bill was not from my HSA account, but my checking account....

so that makes me think the med bills i paid via checking account will not be able to be claimed as medical expenses.

*or how about people who sign up for the same account/healthplan in the middle of the year. for them any medical expenses paid prior to opening the account would not have the same tax break as those paid with the HSA account. am i making any sense?
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HSA savings account & tax question?

Postby jokull » Tue Oct 01, 2013 5:54 am

The medical expenses that you incurred after you opened your HSA and for which you were not reimbursed for by the HSA may be used as Schedule A deductions, assuming they are qualifying expenses. Your total medical deductions not paid for by the HSA have to come up to more than 7.5% of your AGI to do you any good.

You can also not take them as deductions, and get reimbursed for them from your HSA in the future, when you have accumulated enough money in your account.

Expenses which are incurred before opening the HSA cannot be reimbursed by the HSA but can be taken as deductions on Schedule A.
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HSA savings account & tax question?

Postby teneyck31 » Tue Oct 01, 2013 5:58 am

If you do not pay medical bills with the HSA, you would have to meet the medical deduction requirement to get a tax deduction for those expenses.
= by paying with the HSA, I mean - you did not pay directly from the HSA (for example: you wrote a check) and you did not reimburse yourself (reimbursing yourself means: you paid directly with a different payment type - cash, check, charge, etc and you did not take money from the HSA to pay yourself back).

= the federal medical deduction = you must itemize your taxes (schedule A), the money spent on medical costs does not count until you have spent over 7.5% of your income.

"so that makes me think the med bills i paid via checking account will not be able to be claimed as medical expenses." - if you have not already reimbursed yourself, you need to. Contact your HSA to see if you can still get this allocated to 2012. I believe you can until March 31, 2013

"*or how about people who sign up for the same account/healthplan in the middle of the year. for them any medical expenses paid prior to opening the account would not have the same tax break as those paid with the HSA account." = you are correct, if the HSA was in effect until after they had their medical expense, they would only be eligible for an IRS tax deduction, which in reality most people, never are.
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HSA savings account & tax question?

Postby adwr » Tue Oct 01, 2013 6:00 am

Here's what I do:

I pay all medical expenses from my checking account.
Once or twice a year, I sit down, figure out what I haven't been reimbursed for yet and transfer money from the HSA account to me.

I can do that either by linking my bank account and doing an ACH transfer *or* by taking the debit inside to my bank and doing a cash withdrawal.

I'm about to go in and reimburse myself for my 2012 expenses. Because these will be accounted for in 2013, I will put this on part II of the form 8889 next year.

NOTE, the expenses incurred before you opened the HSA *cannot* be reimbursed from the HSA account.
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