Turbo Tax - Questions about HSA

[Felix Mulier]

Felix here,
I'm using Turbo Tax (Premium) for the first time on our 2012 taxes. There are a couple of things in the HSA realm that I think I have correct, but would appreciate a few more eyes. Thanks in advance.

First, we haven't made our complete 2012 contribution yet, but will before April 15. When we do, it will total $7,250 ($6,250 for family + $1,000 for being old). When prompted by TT for the amount contributed, I answered $6,250. Seems right to me because that's what ends up on 1040 Line 25 and on Line 13 of Form 8889. Y'all OK with that?

Second, I haven't yet requested disbursement from our HSA for all of our qualified medical expenses. Still waiting for a couple of 4th quarter bills to catch up to themselves. My HSA administrator switched custodian banks mid-year, so I have 2 1099-SAs. The total of these is smaller than the amount I expect to get once I request the rest of the money. It looks like I should only enter the amounts from the 1099-SAs I received. Right?

Third, once I get the rest of the distribution from my HSA for 2012, will I get a corrected 1099-SA? And will I have to file and amended return (or something?)

Thanks for your help.

 

[borrom2002]

Here is the info. straight from the IRS.

Q-39. When must a distribution from an HSA be taken to pay or reimburse, on a tax-free basis, qualified medical expenses incurred in the current year?
A-39. An account beneficiary may defer to later taxable years distributions from HSAs to pay or reimburse qualified medical expenses incurred in the current year as long as the expenses were incurred after the HSA was established. Similarly, a distribution from an HSA in the current year can be used to pay or reimburse expenses incurred in any prior year as long as the expenses were incurred after the HSA was established. Thus, there is no time limit on when the distribution must occur. However, to be excludable from the account beneficiary’s gross income, he or she must keep records sufficient to later show that the distributions were exclusively to pay or reimburse qualified medical expenses, that the qualified medical expenses have not been previously paid or reimbursed from another source and that the medical expenses have not been taken as an itemized deduction in any prior taxable year. See Notice 2004-2, Q&A 31 and also Notice 2004-25, for transition relief in calendar year 2004 for reimbursement of medical expenses incurred before opening an HSA.
Example. An eligible individual contributes $1,000 to an HSA in 2004. On December 1, 2004, the individual incurs a $1,500 qualified medical expense and has a balance in his HSA of $1,025. On January 3, 2005, the individual contributes another $1,000 to the HSA, bringing the balance in the HSA to $2,025. In June, 2005, the individual receives a distribution of $1,500 to reimburse him for the $1,500 medical expense incurred in 2004. The individual can show that the $1,500 HSA distribution in 2005 is a reimbursement for a qualified medical expense that has not been previously paid or otherwise reimbursed and has not been taken as an itemized deduction. The distribution is excludable from the account beneficiary’s gross income.

 

[JoshTrent]

Not TT related.. but HSA related - I contributed to an HSA last year. My medical expenses were paid with non-HSA funds. I can deduct the qualified medical expenses, as in the past, right? I don't plan on taking a HSA distrubution for those expenses.

End of hijack

 

[borrom2002]

If you are not going to taking a distribution for that particular expense ever then I would think you would fall under the normal deduction rules.

"You may deduct only the amount by which your total medical care expenses for the year exceed 7.5% of your adjusted gross income"

 

[kaneohe]

Second, I haven't yet requested disbursement from our HSA for all of our qualified medical expenses. Still waiting for a couple of 4th quarter bills to catch up to themselves. My HSA administrator switched custodian banks mid-year, so I have 2 1099-SAs. The total of these is smaller than the amount I expect to get once I request the rest of the money. It looks like I should only enter the amounts from the 1099-SAs I received. Right?

Third, once I get the rest of the distribution from my HSA for 2012, will I get a corrected 1099-SA? And will I have to file and amended return (or something?)

Thanks for your help.

no special knowledge of HSAs but if they're anything like IRAs, I would guess that you operate on the calendar yr basis of when funds flow out of the HSA,
not when your medical expenses are incurred esp. since you might not request reimbursement for many yrs. I would then think that any disbursement in 2013 would be handled on a 2013 tax form w/ a 2013 1099.

for JT.......that seems to be a fairly general rule: you can do it this way or that.....just don't do both (reimburse yourself and then use the same expense for a medical deduction...either for meeting the 7.5% floor or for the excess being deducted)

 

[kaneohe]

First, we haven't made our complete 2012 contribution yet, but will before April 15. When we do, it will total $7,250 ($6,250 for family + $1,000 for being old). When prompted by TT for the amount contributed, I answered $6,250. Seems right to me because that's what ends up on 1040 Line 25 and on Line 13 of Form 8889. Y'all OK with that?

.

again w/ no special HSA knowledge.......just comparing to IRAs.....assuming that you have until April 15 to contribute, why wouldn't you enter the full
$7250 that you contributed? That's what you would do w/ the old geezer's catchup contribution for IRAs.