The solution below says I should enter ALL my medical expenses in the medical deduction section in Turbo Tax and that Turbo Tax will then subtract those costs reimbursed from my HSA. The majority of my HSA reimbursements are for non-prescription over-the-counter drugs, which are not deductible on Schedule A. Should I nonetheless include OTC drugs in the medical deduction section? If my OTC costs exceed my reimbursement, won't this leave OTC costs on my Schedule A?
Can I deduct medical costs paid with HSA or MSA funds?
SOLVED•by TurboTax•1636•Updated December 29, 2021
The IRS won't let you deduct medical expenses paid with HSA or MSA funds. Those funds are already tax-free and deducting them as medical expenses would be double-dipping.
When you get to the medical deduction section in TurboTax, enter all your medical expenses, including those you paid from your HSA or MSA. We'll subtract the portion paid from your HSA/MSA (as reported on your 1099-SA form) so you don't deduct them again as medical expenses.
