A quick reminder not to forget to use your HSA account to pay for ALL of your qualified medical expenses.
Remember, you get the deduction based upon CONTRIBUTIONS, and your contributions do NOT have to be made before your expenses are incurred.
In other words, if you go to the doctor and get a $180 bill, you can (EVEN AFTER) contribute $180 to your HSA account. Pay the $180 doctor bill (maybe using a rewards credit card), and THEN reimburse yourself the $180 expense.
This is the best way to deduct medical expenses if you qualify. Otherwise, remember that you can only deduct medical expenses that are 10% above your adjusted gross income. With an HSA account, every contribution is deductible, regardless of when you use the money to pay medical bills.
Also, any medical bills you pay with your HSA cannot be deducted as medical expenses. Also, HSA paid expenses do not count toward the 7.5% floor needed to deduct medical expenses.
Remember, the contribution is deductible, not the expense. Contribute money for every qualified medical expense you have, and the net effect is the same as deducting all of your medical expenses. Remember, unlike a FSA, you can carry over money in an HSA for as long as you like.
See my do it yourself guide to freelance taxes.
About the Author
Brian is a former Certified Financial Planner and financial advisor. He writes for the Finance Gourmet and other financial publications. The material provided on this website is for informational use only and is not intended for financial or tax advice. ArcticLlama, LLC, FinanceGourmet.com, and Brian Nelson, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own tax professional when making decisions regarding your tax situation.
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