I have a HSA Medical account that started in 2016. My employer stated all qualified HSA expenses paid out of pocket could be deducted directly from my adjusted gross income (AGI). In 2016 I ended up paying HSA qualified medical expenses without using my HSA debit card. The advice on this Xchange seems to state I would have to enter these expenses in the Medical deductions section, However, it also states that they can only be deducted if my medical expenses exceed 10% of my AGI. If my employer is correct, where do I enter my out of pocket HSA qualified expenses to get them deducted directly from my AGI?
Your employer's answer obscures the actual process by which you can handle medical expenses paid for with after-tax dollars.
While you are covered by an HSA, if you happen to pay for qualified medical expenses using after-tax dollars (out-of-pocket), you can apply to the HSA plan administrator for a reimbursement of those expenses, even if it is a year or two later (there is no limit in the IRS code when you have to do this)..
Since the dollars in the HSA are pre-tax, you have now effectively paid for those expenses with pre-tax dollars.
What the employer is referring to has nothing to do with "distributions" (when money comes out of the HSA to pay for expenses), but with contributions that you make with after-tax dollars outside of your employer.
Normally, your employer's contributions and your contributions through withholding in a salary reduction arrangement are never reported as income - the amount is removed from boxes 1, 3, and 5 (Wages) on your W-2, but reported in box 12 with a code of "W".
However, you can also make contributions directly to the HSA (such as writing a check) using after-tax dollars, up tp the annual limit. If you do this, you will need to enter this amount separately.
In the HSA interview, you will be asked if you made any contributions (of any kind) to the HSA. Answer "yes".
This will bring up the screen entitled "Let's enter your HSA contributions".
To the right of the second line ("Any contributions you personally made (not through your employer)"), enter the amount of your post-tax contributions.
Your employer's answer obscures the actual process by which you can handle medical expenses paid for with after-tax dollars.
While you are covered by an HSA, if you happen to pay for qualified medical expenses using after-tax dollars (out-of-pocket), you can apply to the HSA plan administrator for a reimbursement of those expenses, even if it is a year or two later (there is no limit in the IRS code when you have to do this)..
Since the dollars in the HSA are pre-tax, you have now effectively paid for those expenses with pre-tax dollars.
What the employer is referring to has nothing to do with "distributions" (when money comes out of the HSA to pay for expenses), but with contributions that you make with after-tax dollars outside of your employer.
Normally, your employer's contributions and your contributions through withholding in a salary reduction arrangement are never reported as income - the amount is removed from boxes 1, 3, and 5 (Wages) on your W-2, but reported in box 12 with a code of "W".
However, you can also make contributions directly to the HSA (such as writing a check) using after-tax dollars, up tp the annual limit. If you do this, you will need to enter this amount separately.
In the HSA interview, you will be asked if you made any contributions (of any kind) to the HSA. Answer "yes".
This will bring up the screen entitled "Let's enter your HSA contributions".
To the right of the second line ("Any contributions you personally made (not through your employer)"), enter the amount of your post-tax contributions.
Note that you can contribute to your 2016 HSA up until April 18, 2017 - you must specify to the HSA plan administrator that the amount is for 2016, not 2017. This will allow you to report the after-tax contribution for 2016. You can then ask for the reimbursement at your convenience.