HSA Medical Expenses - Where to report eligible medical expenses not run through the HSA account

[rmills01]

I have an HSA Account and used it for some of my actual Medical Expenses which are HSA eligible.  However, for most of my Drs Visits and other medical expenses, I used my personal credit card.  I would like to leave the money in the HSA account since the earnings are tax free and I know that I just need to keep receipts of the actual medical expenses in the future if & when I want to pay myself back.  My question is how to handle this in Turbo Tax each year.   I received a 2022 1099-SA for the distributions I ran through the HSA Account but for all the other eligible expenses, do I report them in Turbotax this year and if so where would I enter them?  thanks in advance.  

[PattiF]

Yes, you can report the Medical Expenses that you paid in 2022 out of pocket with your credit card on your 2022 tax return. 

Medical, dental, and vision expenses are reported on  Schedule A and entered in the Deductions & Credits section.

1. With your return open, search for Schedule A and then select the Jump to link in the search results
2. Enter your medical expenses, starting with prescriptions, on the following screens.

Please see this TurboTax Help article about Schedule A and Are Medical Expenses Tax Deductible?

[angelastuart7562]

Hi thank you for the quick follow up.  I am not trying to take any deductions.. just want to report my true HSA expenses for 2022 so I can track it against the allowable annual contributions.  Would you still enter it on schedule A in 2022 or do I wait until the year I want to pay myself back for previous years with the 1099-sa?

[PatriciaV]

It depends. If you plan to reimburse yourself from HSA funds, the expenses (and the HSA reimbursements) would be reported in the year you receive the reimbursement. You will need to keep track of these expenses yourself, not within TurboTax.

Otherwise, you would report your medical expenses as Expert PattiF explained above. Once you have reported medical expenses on your tax return, you have received a tax benefit. Therefore, those expenses would not be eligible for HSA reimbursement.

Bottom line: HSA-reimbursed medical expenses are reported under the HSA; unreimbursed expenses are reported on Schedule A.

Additional Info:

• What is a health savings account (HSA)?
• Why is my HSA distribution taxable?

[rmills01]

Thank you all for your help.

[FitWit]

@PatriciaV @PattiF I have a followup question on this.  Can I take a state (NJ) deduction for the medical expenses that I paid out of pocket but will reimburse myself later through an HSA, in the year that the expenses were incurred?  Or must I wait until the year I reimburse myself through the HSA to report the medical expenses on both on Fed and State income tax return?

Thank you.

[AnnetteB6]

You can take a medical deduction on your NJ state return for expenses that you paid out of pocket during the tax year (if you paid it in 2022, then you can deduct it on the 2022 tax return).  

However, if you intend to reimburse yourself for that expense from a Health Savings Account (HSA), then you would have to include that reimbursement as income on your NJ state return for the year that you took the reimbursement.  You cannot deduct an expense and reimburse yourself from a tax-advantaged account -- that is double-dipping.  You must either deduct it or have it reimbursed, but not both.  

The same holds true for the Federal return.  It can either be deducted or reimbursed, but not both.  

See the following information from the NJ Division of Taxation for more details:

Exemptions and Deductions - Medical Expenses

@FitWit 

[FitWit]

Thank you @AnnetteB6 

I understand about not double-dipping and I have used my HSA account for several years where I paid for the medical expenses directly from the HSA account or reimbursed myself in the same tax year.

My question is about how to report medical expenses that I paid out of pocket in 2022 and will not reimburse myself until some future year.  When paying for medical expenses directly with the HSA (or reimbursing myself for them in the same year), I report the expense and also report that I used the HSA to pay for the expense so that it will be excluded from being a deduction. However, all of the expenses that I report on my Fed return will carry over to my NJ state return and I can get a state deduction for them (the amount that exceeds 2% of my income).

How/when do I report my 2022 medical expenses that I will not repay myself from my HSA until a future year?  Let's say I will repay myself in 2030. Do I include the medical expenses as if they occurred in the year 2030, report that I paid them from my HSA, and then be able to deduct these expenses on my NJ State tax return in that (2030) year? 

If not, then how? If I understand correctly, I cannot report these expenses in 2022 on my Fed form or I would be itemizing them which would exclude me from using an HSA to reimburse myself later.  And I can only report on my NJ state form whatever medical expense I have reported on my Fed form for the same year.

Can you please provide the tax reporting steps (Fed & State) for medical expenses that I paid out of pocket in one year (say 2022), but will reimburse myself for in a future year?

Thanks much in advance.

[AnnetteB6]

There are no steps for reporting medical expenses that you paid out of pocket in 2022 that you plan to reimburse yourself for in a future year.  You cannot deduct it in 2022 and then get a reimbursement in a future year.  If you did that, then the reimbursement would be taxable because the expense would have already been deducted on a previous tax return.

When you wrote, 'I cannot report these expenses in 2022 on my Fed form or I would be itemizing them which would exclude me from using an HSA to reimburse myself later.  And I can only report on my NJ state form whatever medical expense I have reported on my Fed form for the same year,' that is correct.  You can either itemize the expenses on your Federal and state return for the year that you paid them, or you can not itemize them and get a reimbursement in the future.  

If your out-of-pocket expenses are enough to provide you with a tax benefit on your 2022 tax return, you may want to just go ahead and deduct them without planning to reimburse yourself for these same expenses in the future.  Preserve your HSA funds for expenses you incur in years where you do not get a tax benefit from deducting them.

@FitWit 

[FitWit]

Please confirm if you agree with this post which describes the exception in the state of New Jersey for HSA contribution/distributions: https://ttlc.intuit.com/community/tax-credits-deductions/discussion/are-hsa-reimbursements-nonreimbu... which states:

"But in New Jersey, as we see, HSA contributions are not tax-deductible, so they are like ordinary after-tax dollars. This means that any HSA distributions made for qualified medical expenses are indeed "unreimbursed" medical expenses, because the HSA dollars are not tax-advantaged in New Jersey."

Therefore, if a person pays out of pocket for medical expenses and does not itemize them on their Federal return and does not "reimburse" himself/herself from an HSA (i.e., does not take an HSA distribution) in the year the medical expense was incurred, those expenses will be treated as unreimbursed medical expenses for state only (and NJ only) in the year the HSA distribution is taken. 

Example: a person has $5000 in medical expenses in 2022 that he pays out of pocket and does not itemize on his Federal return.  In a later year, say 2032, the person takes an HSA distribution to "reimburse" himself for these same medical expenses.  These expenses will be unreimbursed medical expenses (in excess of the 2% of the person's income or whatever the limit is in the year 2032) on the NJ state tax return.

[BillM223]

I rather imagine (without having done a detailed study on New Jersey), that the medical expenses taken on the New Jersey return need to be taken in 2022 - the year the dollars were spent, not in 2030.

Yes, with the ability to reimburse yourself years later, the IRS has created a conundrum, but oh well. Just write done what you did and why, 

I think that what I wrote in 2019 (actually earlier) is still correct.  But it emphasizes the need to document what you did, because there is no way to remember what you did a year later.