Timing medical for itemizing vs. HSA

[LCP]

Taxpayer is able to time his itemized deductions so that he itemizes every other year. As an aside he really loves that new property tax add on!!

Here's the issue ..... he also has an HSA and realizes that he can't receive a distribution for the same expenses that he deducts. Is the first 7 1/2% of his AGI part of that classification?

[JG EA]

Taxpayer is able to time his itemized deductions so that he itemizes every other year. As an aside he really loves that new property tax add on!!

Here's the issue ..... he also has an HSA and realizes that he can't receive a distribution for the same expenses that he deducts. Is the first 7 1/2% of his AGI part of that classification?

It starts with the distribution. Pub 969 says you cannot deduct qualified medical expenses as an itemized deduction on Sch A that are equal to tax free distrribution from HSA. (Can't use at all on the A.)

Aside: Property tax add on - this is the year he doesn't itemize I presume. Yes, it is nice.

[LCP]

So if taxpayer leaves the money in the HSA and doesn't take a distribution he can deduct it.

What happens in 2009? My understanding is that 2008 medical expenses can be reimbursed in subsequent years.

[Gretel]

That all depends on what the taxpayer wants to do. If he wants to have the option to reimburse himself in later years, he can do so, BUT only if he hasn't used the medical bills for itemized deductions.

He even could reimburse himself after 10 or 20 years and use the distribution to go on a cruise.