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Category: Tax
Satisfied Customers: 12686
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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This year 2015 is a first year I am eligible and have HSA

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:  emc011075 replied 2 years ago.
Hi. My name is ***** ***** I will be happy to help you.
I am not exactly sure how do you want to reimburse yourself from contributions you will make in future years. If you pay your medical expenses in the current year you can pay it out of your own pocket or use HSA funds. Medical expenses that was not paid with pre tax HSA funds can be deducted on Schedule A as part of your itemized deduction. You cannot take a distribution from your HSA next year and apply it to medical expenses you paid in the current year if that's what you meant by "reimbursing yourself".
Sorry, if that's not the answer you were hopping for. HSA, just like 401K or IRA is government program and it has to follow strict regulation.
You are still offline. So if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.
Expert:  Lane replied 2 years ago.
Please don't shoot the messenger here, but the HSA distribution made in a certain tax year must be for expenses PAID in that tax year
Because we (individual tax payers) are in a cash basis/tax year system, there can be some flexibility around actual dates WITHIN the year, but in YOUR situation, where you contributed the maximum and expenses exceed what's in the account TO distribute, you cannot "apply" reimburse from to a future year's contribution.
So sorry.
Here's the IRS guidance on this:
Now, as you can see the tax year of the "qualifying expense" is based on when PAID... so if you have the ability to defer a procedure or paying the bill into next year THAT will work.
And on the deductibility piece, health care expenses ARE deductible, but to do so must be above 10% of AGI (7.5% of AGI for those 65 and over).
Hope this helps
Please let me know if you have questions...
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