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)?
Yes, you have to keep track.
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
Bob Sandler
According to Michael F. Stemper snipped-for-privacy@gmail.com:
Think of it as an IRA with a trap door you can use to pay medical expenses.
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.
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