Why is TT deducting my HSA payouts from my Out of pocket medical expenses?

Forum|Forum|7 years ago
June 6, 2019
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TurboTax Deluxe Online

Best answer by BillM223

TurboTax expects the taxpayer to enter all medical bills (no matter how paid) in the Itemized Deduction interview (Federal->Deductions & Credits->Medical->Medical Expenses).

Then TurboTax does two things: (1) it asks the taxpayer for the amount of insurance reimbursement to net against the total medical bills, and (2) it carries the HSA distributions automatically to this process to net against bills paid with HSA funds. The result of which is only those bills that were paid with after-tax money, which may be deductible on Schedule A.

For taxpayers without an HSA, it doesn't matter if the taxpayer enters only the net medical expenses (i.e., net of insurance reimbursement), because in this case the effect is the same. But for HSA taxpayers, it's best to enter all medical bills in the Itemized Deduction interview.

BillM223Answer

Level 15

TurboTax expects the taxpayer to enter all medical bills (no matter how paid) in the Itemized Deduction interview (Federal->Deductions & Credits->Medical->Medical Expenses).

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