How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask socrateaser Your Own Question
socrateaser, Lawyer
Category: Tax
Satisfied Customers: 38911
Experience:  Retired (mostly)
Type Your Tax Question Here...
socrateaser is online now
A new question is answered every 9 seconds

I am currently unemployed and have my family paying my medical

This answer was rated:

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.

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 4 years 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.

There is no way to reimburse your family members (unless they are health care professionals who are billing you directly).

Hope this helps.
socrateaser and 2 other Tax Specialists are ready to help you