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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29798
Experience:  Taxes, Immigration, Labor Relations
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This year 2015 is a first year I am eligible and have HSA account.

Customer Question

This year 2015 is a first year I am eligible and have HSA account. My husband and I have medical bills incurred this year that exceed the allowable contribution amount.
May I reimburse myself from contributions I will make to the HSA future years? If 'yes', for how many future years?
If 'no', can I deduct the balance of these medical expenses year 2015?
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.
Hi and welcome to our site!Several issues....Contributions into HSA account might be excluded from taxable income.To be an eligible individual and qualify for an HSA, you must meet the following requirements. •You must be covered under a high deductible health plan (HDHP) on the first day of the month.•You have no other health coverage (with some exceptions). •You are not enrolled in Medicare.•You cannot be claimed as a dependent on someone else's tax return. . When you pay medical expenses during the year that are not reimbursed by your HDHP, you can ask the trustee of your HSA to send you a distribution from your HSA. 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.. You do not have to make distributions from your HSA each year.You may keep the money in HSA - and earnings credited to that account will be deferred from tax liability.There is no limit how long you may keep the HSA account.If you are no longer an eligible individual, you woudl not be eligible to make additional contributions - but can still receive tax-free distributions to pay or reimburse your qualified medical expenses.
Expert:  Lev replied 2 years ago.
How you report your distributions depends on whether or not you use the distribution for qualified medical expenses (defined earlier).
•If you use a distribution from your HSA for qualified medical expenses, you do not pay tax on the distribution but you have to report the distribution on Form 8889. However, the distribution of an excess contribution taken out after the due date, including extensions, of your return is subject to tax even if used for qualified medical expenses. Follow the instructions for the form and file it with your Form 1040.
•If you do not use a distribution from your HSA for qualified medical expenses, you must pay tax on the distribution. Report the amount on Form 8889 and file it with your Form 1040. You may have to pay an additional 20% tax on your taxable distribution.
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HSA administration and maintenance fees withdrawn by the trustee are not reported as distributions from the HSA.
There is an additional 20% tax on the part of your distributions not used for qualified medical expenses. Figure the tax on Form 8889 and file it with your Form 1040.
There is no additional tax on distributions made after the date you are disabled, reach age 65, or die.
Let me know if you need any clarification or help with reporting.
I am here to help you with all tax related issues.