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socrateaser
socrateaser, Lawyer
Category: Tax
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Experience:  Retired (mostly)
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I am currently unemployed and have my family paying my medical

Resolved Question:

I am currently unemployed and have my family paying my medical bills. I also have health insurance they are paying each month. I want to know if I can use money from a past Simple IRA to reimburse them or myself for for out-of-pocket medical expenses without the usual 10% penalty. Regular tax should be low because I made very little this year. Thanks.
Submitted: 1 year ago.
Category: Tax
Expert:  socrateaser replied 1 year ago.
Hello,

IRC 72(t)(2)(B) provides that medical expenses can be distributed from a SIMPLE IRA without incurring the 10% additional tax, but only to the extent that the expenses exceed 10% of your Adjusted Gross Income. Health insurance can also be paid directly without incurring the tax penalty. IRC 72(t)(2)(D).

The best way to determine whether or not you have exceeded a threshold is to use some tax preparation software and create a few scenarios. That way, you can plug in the numbers at your leisure and see what you can get away with.

Hope this helps.
Customer: replied 1 year ago.

Does 'pay directly' mean future expenses or can me or my family be reimbursed for past payments. The threshold should not be a problem. I made less that $2000.00 this year. The tax software trial is a good idea. Thanks, Mark.

Expert:  socrateaser replied 1 year ago.
There is no way to reimburse your family members (unless they are health care professionals who are billing you directly).

Hope this helps.
socrateaser, Lawyer
Category: Tax
Satisfied Customers: 33542
Experience: Retired (mostly)
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