I had wisdom teeth surgery in October last year, and it slipped my mind that I had an HSA through my former employer (left the job in December last year, started a new job this year without an HSA). I just withdrew money to cover the rest of the CareCredit card balance, essentially paying for a medical expense. Would that be the case when filing next year and I can put that down on form 8889 as a medical expense distribution?
Also, as a secondary question, I plan to withdraw the remaining balance ($3122) to use for non-medical expenses. I know that would be counted next year as income and subject to the 20% penalty; my question is how much should I expect that to be to prepare for owing that amount (planning on just saving a portion of the withdrawn balance to pay that if needed). Thanks in advance for any assistance!
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Well, at least you will have to save 20% of $3122 which amounts to 624.40 to cover the penalty you will incur for taking a distribution to cover non-qualified medical expenses. In addition, the total withdrawal amount will also be subject to income tax based on your ordinary tax rate.
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