HSA record-keeping

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Michael F. Stemper

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Jul 1, 2021, 3:51:44 PMJul 1
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I received a 5498-SA the other day, which reminded me that I still have
an HSA sitting around. I've never actually used it, so I'm a little
vague on how they work.

Do I need to keep track of medical expenses that are paid by the HSA?
Put them on Schedule A and then declare the money coming out of it
as income? Or does the fact that the two offset each other mean that
neither will show up on my 1040 (and schedules)?

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Michael F. Stemper
The name of the story is "A Sound of Thunder".
It was written by Ray Bradbury. You're welcome.

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Bob Sandler

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Jul 1, 2021, 4:16:46 PMJul 1
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>I received a 5498-SA the other day, which reminded me that I still have
>an HSA sitting around. I've never actually used it, so I'm a little
>vague on how they work.
>
>Do I need to keep track of medical expenses that are paid by the HSA?

Yes, you have to keep track.

>Put them on Schedule A and then declare the money coming out of it
>as income? Or does the fact that the two offset each other mean that
>neither will show up on my 1040 (and schedules)?

Medical expenses that you pay from your HSA cannot be
deducted on Schedule A.

The amount you took out of the HSA, and the amount you used
for qualified medical expenses, go in Part II of Form 8889.
If those two amounts are equal, i.e. all the money from the
HSA was used for qualified medical expenses, then it doesn't
appear on Form 1040 or anywhere else besides Form 8889. If
any money from the HSA was not used for qualified medical
expenses, that amount will be reported as income on Schedule
1. Unless you qualify for an exception, the amount that was
not used for qualified medical expenses will also be subject
to an additional 20% penalty.

Bob Sandler

John Levine

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Jul 2, 2021, 9:13:32 PMJul 2
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According to Michael F. Stemper <michael...@gmail.com>:
>I received a 5498-SA the other day, which reminded me that I still have
>an HSA sitting around. I've never actually used it, so I'm a little
>vague on how they work.

Think of it as an IRA with a trap door you can use to pay medical expenses.

>Do I need to keep track of medical expenses that are paid by the HSA?

As others have said, yes but in the common case that you only take money
out of the HSA to pay medical expenses, it's not income and doesn't appear
anywhere else.

I have an HSA that is mostly in stocks, so it is doing great this year
and I am not inclined to take any money out at this point. My HSA
custodian, Lively, makes it easy to track the medical expenses but not
reimburse them, so I can save them up and use them to take a tax-free
withdrawal sometime in the future.

--
Regards,
John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly
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