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Lev
Lev, Tax Preparer
Category: Finance
Satisfied Customers: 28082
Experience:  Personal Investment, Tax Preparation
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I HAVE MEDICAIDE.I want to sell my house and move into a

Customer Question

i HAVE MEDICAIDE.I want to sell my house and move into a condo purchased by my daughter.
Submitted: 9 months ago.
Category: Finance
Expert:  Lev replied 9 months ago.

You woudl need to report sale proceeds to Medicaid.

Expert:  Lev replied 9 months ago.

You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax.

That is regardless of your disability - but the key in determination is - if funds were used for qualified medical expenses.

Expert:  Lev replied 9 months ago.

Your assessments are correct.
However - the administrator of that life insurance policy is not in the position to determine disability - so they are OK.

Regarding distribution code I woudl expect to see "2" as the person is above 59 1/2 - but that woudl not affect your filing - just do not calculate any penalty.

Because of age - there will not be any issues.

Expert:  Lev replied 9 months ago.

Regarding taxable amount - you are correct.

See page 22

https://www.irs.gov/pub/irs-pdf/p525.pdf

Surrender of policy for cash. If you surrender
a life insurance policy for cash, you must include
in income any proceeds that are more
than the cost of the life insurance policy. In most
cases, your cost (or investment in the contract)
is the total of premiums that you paid for the life
insurance policy, less any refunded premiums,
rebates, dividends, or unrepaid loans that were
not included in your income.
You should receive a Form 1099-R showing
the total proceeds and the taxable part. Report
these amounts on lines 16a and 16b of Form
1040 or on lines 12a and 12b of Form 1040A.

.

So you would need to determine the taxable amount on your own OR you woudl need to contact the sender asking for corrections.

.

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