HSA and Taxes

[michelleh1]

I do our taxes online. Last year was our first year with having an HSA. It asked if we made any disbursements, which when I looked it up it said that paying for qualified medical expenses is a disbursement. Then it asked me to list our disbursements. Do I really have to enter in the federal id and information for everyone that we paid using our HSA debit card? I did save all of the receipts, but I'll probably have to call to get the federal ID number. I had no idea that having an HSA would be a tax nightmare. I thought it'd be like our FSA, but we'd manage it ourselves. Oy!

 

[havaneselover]

Is a distribution when you reimburse yourself for a qualified medical expense (as opposed to paying a provider directly with my HSA debit card)?

Never mind. I see the instructions for form 8899. You should just need to fill out line 14a and 15. So my hsa is with wf. They will send me a form saying I spent $75 last year. I'll put that in 14a. I'll also put it in 15 because all of my expenses are qualified. That's my interpretation but this will be my first year having a distribution.

Glad you asked this. I didn't realize this was required.

 

[wendow]

Hmm, we have an HSA (have for three years), and I did not list anything like that on our taxes. All of our disbursements were paid directly to us.

 

[michelleh1]

I'm not sure havaneselover.

Here's the info under the Disbursements tab:

Distributions from an HSA

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 take distributions from your HSA each year.

If you are no longer an eligible individual, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses. Generally, a distribution is money you get from your health savings account. Your total distributions include amounts paid with a debit card that restricts payments to health care and amounts withdrawn from the HSA by other individuals that you have designated (if any). The trustee will report any distribution to you and the IRS on Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA.

Qualified medical expenses Qualified medical expenses are those expenses that would generally qualify for the medical and dental expenses deduction. These are explained in Publication 502, Medical and Dental Expenses. Non-prescription medicines (other than insulin) purchased in tax years beginning after December 31, 2010, are not considered qualified medical expenses.

For HSA purposes, expenses incurred before you establish your HSA are not qualified medical expenses. State law determines when an HSA is established. An HSA that is funded by amounts rolled over from an Archer MSA or another HSA is established on the date the prior account was established.

If, under the last-month rule, you are considered to be an eligible individual for the entire year for determining the contribution amount, only those expenses incurred after you actually establish your HSA are qualified medical expenses. For additional guidance on Health Savings Accounts and other tax-favored health plans see IRS Publication 969.

 

[supersnoop]

I do our taxes online. Last year was our first year with having an HSA. It asked if we made any disbursements, which when I looked it up it said that paying for qualified medical expenses is a disbursement. Then it asked me to list our disbursements. Do I really have to enter in the federal id and information for everyone that we paid using our HSA debit card? I did save all of the receipts, but I'll probably have to call to get the federal ID number. I had no idea that having an HSA would be a tax nightmare. I thought it'd be like our FSA, but we'd manage it ourselves. Oy!

No. I've had an HSA for 8 years now. As havaneselover stated, you enter how much came out of the HSA, and you enter in how much was spent on qualified expenses. Those numbers should match.

 

[michelleh1]

oh, I guess it's Distributions, not Disbursements if that makes a difference.

 

[michelleh1]

So, based on the info I posted above. If we used our HSA debit card to make payments to doctors, did we take a Distribution? I interpret it to mean that we did, then it asks for who the distribution was made to, including federal ID.

 

[havaneselover]

I just checked and I am getting a 1099 sa which shows my gross distribution for 2015. All of it is qualified. I use Tax Act but I think it will be very straightforward.

 

[havaneselover]

So, based on the info I posted above. If we used our HSA debit card to make payments to doctors, did we take a Distribution? I interpret it to mean that we did, then it asks for who the distribution was made to, including federal ID.

Yes. Are you using tax software?

 

[michelleh1]

Yes, I'm using Tax Act.

 

[michelleh1]

OK, that was the only account I didn't print my tax statements from. Thank you havaneselover! I do have a 1099-sa to file. I'll add that and see what comes up.

 

[lanejudy]

As haveneselover indicated above, you should get a 1099 from the financial institution where you have your HSA. You only need to report the totals.

HSA in this sense is a Health Savings Account, which is tied to a high deductible medical plan. Some use the term "HSA" meaning a Flexible Heathcare Spending Account, which is a different animal.

 

[havaneselover]

Yes, I'm using Tax Act.

Keep us posted. I'm hoping it's simple

 

[wendow]

Keep us posted. I'm hoping it's simple

Yes, please do! It's not been complicated in the past. Hope it hasn't changed.

Aren't all medical expenses that you use the HSA for "qualified"? I guess I don't understand the language. If it weren't a 'qualified' expense, they would deny the disbursement of funds.

 

[michelleh1]

Thank you everyone for your help! I was confused because it asked for the Payer's name, ID, etc. That is the organization that issued my 1099-sa, not the actual people I paid expenses to, LOL. I'm looking forward to helping my son with his 1040EZ. I hate taxes even though I have my accounting degree.

 

[havaneselover]

Yes, please do! It's not been complicated in the past. Hope it hasn't changed.

Aren't all medical expenses that you use the HSA for "qualified"? I guess I don't understand the language. If it weren't a 'qualified' expense, they would deny the disbursement of funds.

You could technically use it for something that isn't eligible/qualified.

 

[wendow]

You could technically use it for something that isn't eligible/qualified.

Would it not just be denied in that case? We have to send in copies of bills/EOB's for reimbursement.

 

[adudeinblue]

Would it not just be denied in that case? We have to send in copies of bills/EOB's for reimbursement.

I think it depends how your financial institution/insurance manages the HSA. The credit union issued our HSA with debit cards to use. It's easily misused for something else?

 

[supersnoop]

Would it not just be denied in that case? We have to send in copies of bills/EOB's for reimbursement.

HSA's are just a savings account that you own. Mine comes with a debit card and I can order checks. You're on the honor system with the IRS.

 

[wendow]

Hmm, OK, ours is managed different then. We pay for services up front and send in a bill, or submit the medical bill once we receive and then pay. We have to provide exact dates, who received the care and what type of care was received. Didn't realize there was such variations in HSA's.