How do I reconcile this situation: My husband has accidentally used his HSA debit card for non-medical purchases.

Forum|Forum|7 years ago
June 6, 2019
1 reply
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Do the retailers and/or banks send specific purchase information to the IRS? When we fill out the Form 8889, I assume the bank will show that he has spent "X" dollars with his HSA debit card. (Hopefully it won't show that it was at the gas station!) May I just balance that by claiming an equal amount for "qualified medical expenses" on Form 8889? We have plenty of medical expenses that WOULD qualify--like chiropractors, etc, that we don't otherwise deduct since we don't itemize. Our intention was to use the HSA as an investment, and we goofed by accidentally using the HSA debit card. In advance, I SO appreciate your help!

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Best answer by Opus 17

Only the total amount of HSA withdrawals is reported. And in fact, it doesn't actually matter that the money was spent at other places, as long as you have at least as much qualified medical expenses during the year. (A qualified medical expense is an expense that was incurred after the date the HSA was opened, and that was paid during the tax year.)

For example, you can pay your expenses with a regular credit card or from a checking account, and then reimburse yourself with a withdrawal to your own checking account. You just need to have sufficient qualified medical expenses.

Opus 17

Answer

Level 15

Opus 17

Level 15

Alternatively, there is a procedure to return an unallowable withdrawal, you would need to contact the HSA bank, it usually needs a special form.

Also note that if you are not maxing out the HSA now, you can do that and still pay your expenses tax free. For example, if your plan is to invest $2500 per year in a single HSA (maximum contribution $3400) you could deposit additional money (up to $3400) and immediately withdraw it and still get the tax benefit. In other words, you get a bill on Monday, put the money in the HSA Tuesday, withdraw it Wednesday, and pay the doctor on Thursday for an instant tax deduction.