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February 3, 2022
Question

Can I include the money used in my HSA account? I am in section of deductions and it is asking for any medical expenses. Do I only include what I paid out of my pocket?

  • February 3, 2022
  • 3 replies
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Can I use funds that were used out of my HSA account as medical expenses?

3 replies

Employee
February 3, 2022

You can’t use HSA funds spent as an itemized medical deduction. 

Employee
February 3, 2022

If you have a 1099-SA reporting reimbursements from an HSA, you should also enter those expenses as medical expenses.   Turbotax wants you to enter all your expenses, then will ask you about reimbursements.  It will automatically subtract your HSA reimbursements from the expenses you enter, which means that if you don't enter your expenses, it will subtract the reimbursement from your other medical expenses and reduce your potential deduction. 

February 3, 2022

No, you may not use HSA distributions as deductible Medical and Dental Expenses. This is because you have already received a tax benefit when you made contributions to the HSA - no double-dipping.

 

HOWEVER (and this is confusing), you will see a screen in the Medical and Dental Expenses interview that asks you to confirm that you had $X in HSA distributions (from your 1099-SAs). Why? Because TurboTax assumes that you entered all medical expenses, both reimbursed and unreimbursed. There is a specific question about how much insurance reimbursement you received, so TurboTax can subtract the insurance reimbursement from the expenses you reported, so that the net is only unreimbursed medical expenses (which can be deducted).

 

However, TurboTax also subtracts the HSA distributions from your expenses.. For most taxpayers, this does not matter (because their amount medical expenses is nowhere near the limit), but it often comes as a big surprise that TurboTax expects you to enter ALL medical expenses, even though it has no intention of letting you deduct the reimbursed expenses (i.e., by insurance or by your HSA).

 

You can see this on the Medical Worksheet.

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