HSA contributions and withdrawals

[jodcute]

I am 52 and I contributed $6,528.75 in 2016 and my employer gave me $1,000 since I have the High deductible insurance.  Questions:
1.  do I report the $1,000 as an additional income somewhere?
2. I had a total of $10K in medical expenses in 2016, which I paid all of it out of my own pocket.  I didn't use my HSA account to pay for these because I wanted to save it for my retirement.  Can I include these expenses in my schedule A?  or is that considered double dipping?
3. I just found out recently that I am getting laid off on April 1st.  HR told me that come May 1st, I will be responsible paying for the monthly HSA account fees.  Since I don't want to pay these fees, HR suggested to reimburse myself for all of the qualified expenses I paid in 2016.  I also scheduled my cataract surgery late April so I don't have to use any sick time or vacation time.  currently, I have about $9K in my HSA account.  Can I go ahead and reimburse myself for the $9K and use that money to pay for my cataract surgery?  or do I wait until I have my cataract surgery and reimburse myself?  I just don't know if there will be tax complications if I choose the first one.  The estimated out of pocket for the surgery is $13K.  I am having the HD lenses which the insurance is not covering.  Thank you

[PaulaM]

1. If your employer reported the $1000 contributions on your W-2, then you would not enter the amount anywhere else. This would be reported in Box 12 with a code W. If this was not your case, then comment here so I can direct you to the appropriate section.

2. Yes, do enter your after-tax medical expenses in the medical section on schedule A. The total medical expenses will need to exceed 10% (7.5% for those born before 1/2/52) of your AGI to receive a benefit. This is not double-dipping at all, because you took no distributions from your HSA. It is a smart retirement strategy to maximize the tax benefits of an HSA.

3. You have a choice to make. If you do reimburse yourself for 2016 expenses from the HSA fund, then you will only be able to deduct the portion of medical expenses that exceed your HSA disbursements on the schedule A. If the $1000 difference doesn't meet the 10% AGI threshold, then no deduction on schedule A. If you decide to go this route, then make the choice by the due date of the return 4/18/17.

If you wait until the surgery date and pay for the surgery with your HSA fund, then you will empty the fund balance for qualified medical expense and have no fees to pay May 1st. Next year, you will receive the 1099-SA for the disbursement.