Health Savings Account HSA

What are unreimbursed qualified medical expenses?

Qualified medical expenses for HSA purposes are unreimbursed (not covered by insurance provider) medical expenses that could otherwise be deducted on Schedule A (Form 1040). For example, if you have a $1,000 hospital bill and your insurance covers $800 and you use your HSA to pay for the $200 that you owe, then the $200 is unreimbursed medical expenses paid for by your HSA.

The definition of what constitutes a qualified medical expense is very broad and includes expenses to diagnose, cure, mitigate, treat, or prevent disease. However, cosmetic surgery is not deductible unless it is related to disfigurement from a congenital abnormality, accidental injury, or a disfiguring disease. Other examples of nondeductible medical expenses are nonprescription drugs, doctor prescribed travel for "rest," and expenses for the improvement of your general health such as a weight loss program or health club fees (the weight loss program is deductible if it is to treat a specific disease).

Examples of deductible medical expenses include abortions, acupuncture, alcoholism treatment, ambulance costs, birth control pills, child birth classes, chiropractors, contact lenses, crutches, dentist, dentures, doctor fees, drug addiction treatment, prescription drugs, dyslexia reading programs and tutors, eye examination and glasses, guide dogs, health insurance, hearing aids, hospital bills, insulin, laboratory fees, long-term care insurance, nursing home if for medical treatment, optometrist, osteopath, physical therapy, psychiatrist, psychologist, travel to medical clinics, vasectomy, and wheelchair. This list does not contain every medical deduction available.

What is the definition of a first-time homebuyer?

The First-Time Homebuyer Credit is expired and no longer available in 2014.

What if I built my own home?

The homebuyer tax credit is no longer available in 2014.

What is the difference between a contribution and a distribution in regards to my HSA?

A contribution is an amount of money that you deposit into your HSA. A distribution is a withdrawal of funds from your HSA.

Do I owe taxes on the distributions from my HSA?

If you use the distributions from your HSA for eligible medical expenses, you will not pay taxes on them. Remember to keep a receipt for medical expenses paid for by a HSA. Any distribution that is not used for eligible medical expenses is taxable.

Where do I find the total amount I contributed for the year to my HSA?

You should receive Form 5498-SA from the Trustee of your HSA. This form will show your contribution amount. You will need to contact the trustee of your HSA if you cannot find this form.

Can I make contributions to my HSA after December 31, 2014?

Yes. You can make contributions to your HSA to include on your 2014 tax return up until April 15, 2015. You will need to contact the trustee of your HSA to ensure that they credit your January 1, 2015 through April 15, 2015 contributions to the correct tax year. If you make contributions after December 31, 2014, your trustee should send you an updated Form 5498-SA that will include the new contributions.

What amount should I enter for distributions from my HSA?

The trustee of your HSA should send you Form 1099-SA. Your total distribution amount will appear on this form. You will need to contact the trustee of your HSA if you cannot find this form.

What is a High Deductible Health Plan (HDHP)?

An HDHP is a health plan that meets the following requirements:

Minimum annual deductible of $1,250
Maximum out of pocket expense: $6,350

Minimum annual deductible of $2,500
Maximum out of pocket expense: $12,700

Are contributions made by my employer included in my income?

Contributions to your HSA made by your employer are NOT included in your income. You can claim contributions you made and contributions made by any other person other than your employer on your behalf, as an adjustment to income. However, if you made employee contributions to your HSA plan as part of a cafeteria plan, then those contributions are already included in Box 12 of your W-2 (W2) with code "W" and are considered employer contributions. A cafeteria plan contribution already has reduced your Box 1 W-2 (W2) wages by the amount of any contributions you made to your HSA plan, so you are not eligible for a separate HSA Deduction on your Form 1040.

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