So I did some digging starting with Section 223(f)(1) and I'm wondering if my logic makes sense:
Section 223(f)(1) says:
Any amount paid or distributed out of a health savings account which is used exclusively to pay qualified medical expenses of any account beneficiary shall not be includible in gross income.
Section 223(d)(2)(A) defines “qualified medical expenses” as those that are defined in section 213(d) (Medical, dental, etc., expenses). So I went to 213(d) and it the only reference I can find to a time frame of allowable deductions is in 213(a) (emphasis mine):
There shall be allowed as a deduction the expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, his spouse, or a dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof), to the extent that such expenses exceed 7.5 percent of adjusted gross income.
So then I pulled up CFR section 1.213-1(a)(1) (Medical, dental, etc., expenses) which says (again emphasis mine):
Section 213 permits a deduction of payments for certain medical expenses (including expenses for medicine and drugs). Except as provided in paragraph (d) of this section (relating to special rule for decedents) a deduction is allowable only to individuals and only with respect to medical expenses actually paid during the taxable year, regardless of when the incident or event which occasioned the expenses occurred and regardless of the method of accounting employed by the taxpayer in making his income tax return. Thus, if the medical expenses are incurred but not paid during the taxable year, no deduction for such expenses shall be allowed for such year.
So I would assume the CFR has precedent over language in an IRS pub? If so, does my logic/argument make sense here that essentially the CFR bases the deduction on when I pay for medical expenses not when I incur them?
