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Old 10-17-2009, 11:54 PM   #21
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Originally Posted by jdw_fire View Post
if you take money from your IRA and legally contribute it to your HSA you in essence wont pay taxes on it because while the WD from your IRA is taxable, the contruibution to your HSA is tax deductable and hence they wash.
Of course!
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Old 10-18-2009, 02:20 AM   #22
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Originally Posted by schucrew View Post
What about using your current medical expenses as a tax deduction instead of getting reimbursed by your HSA? Even with a HDHP, we have pretty hefty premiums, and then alot of out of pocket expenses for medical since we have the high deductible. So we figure we would come out ahead by taking the deduction and letting the HSA balance grow. .
Depends on your personal situation, of course, but because of the 7.5% rule,
unless your medical expenses are very high or AGI very low, it is often difficult to get significant deduction benefits from medical expenses.

from IRS Pub 502
How Much of the Expenses Can You Deduct?

You can deduct only the amount of your medical and dental expenses that is more than 7.5% of your adjusted gross income (Form 1040, line 38).
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Old 10-18-2009, 08:04 AM   #23
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Originally Posted by kaneohe View Post
Depends on your personal situation, of course, but because of the 7.5% rule,
unless your medical expenses are very high or AGI very low, it is often difficult to get significant deduction benefits from medical expenses.

from IRS Pub 502
How Much of the Expenses Can You Deduct?

You can deduct only the amount of your medical and dental expenses that is more than 7.5% of your adjusted gross income (Form 1040, line 38).
Which is another reason to use HSA today if needed, and not save it for later when you are in a lower tax bracket and the 7.5% bracket may be broken.
TJ
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Old 10-18-2009, 09:13 AM   #24
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TJE...... there are at least 3 different options being discussed:
1) Use HSA for current medical expenses (I think this is your proposal)....w/d tax free
2) Use HSA for future expenses....if medical expenses not large enough, use for other
expenses........w/d for other expenses will be taxed & if before age 65, penalized
3) Use HSA in the future but save all your medical receipts from day 1 of HSA...
w/d tax free for both current and older medical expenses............some of the posts (including mine) weren't very clear but the
reference to issues about saving receipts over long periods of time pertained to this
This option gives you more tax-advantaged space for longer periods of time but has
its own issues but is preferred by ? many
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Old 10-18-2009, 09:33 AM   #25
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Over long periods of time, surprises can happen.........printed ink fades sometimes into oblivion, other media get updated so tapes, floppies, etc become unreadable by newer devices, things get lost, burned, flooded, etc. ...
This has been my concern, but I scan all the records, and they are backed up on my general weekly DVD backups, some of which go to the safe deposit box at the bank. Probably sufficient.
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Old 10-18-2009, 02:33 PM   #26
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Taking from HSA now or later depends on tax laws and return of HSA vs
taxable accounts. My HSA is definitely way more expensive than VG.
I attached a quick and dirty spreadsheet to illustrate.
TJ
Attached Files
File Type: xls HSA_paynoworlater.xls (73.5 KB, 5 views)
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Old 10-22-2009, 10:00 PM   #27
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Originally Posted by teejayevans View Post
I think if you can use it today to pay medical costs you should, because
you will not pay taxes on that money. If you treat it as a IRA, it will be
taxed at normal rates, yes they may be lower in retirement, but unlikely
to be zero.
TJ
I am not treating it as an IRA. I will use the money for medical costs eventually, just not now. I will not pay taxes on this money....ever.

There is no way I will avoid incurring in medical costs the amount I'll be able to build in my HSA. We have about $11,000 today, we're adding $3k/year each, and will rehire in about 5 years...so I'm estimating we might get up to about $60k. If we don't spend $60k on medical costs from age 53 until we do, I'll be a monkey's uncle.

Remember you can even use the money on LTC, OTC meds, etc. That money will go FAST. Heck, we've spent $6k this year alone on 2 colonoscopies, an EGD, and a couple doctors office visits.
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Old 10-22-2009, 10:01 PM   #28
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thanks to everyone for your thoughts...I think I'm on the right track.
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