HSA & Distribution

[rfk]

Question about:

A 1099-SA; I get the reason for it, but the following:

> Gross Distribution is $1,119.42
> Distribution Code is 1
> HSA

My question is that my client says that he used his "debit card' to incur medical and dental," and said that he has some money left on the card. But how much of this is considered to be tax free ($1,119.42), the whole thing or a portion? I believe that the gross amount is usually the amount of monies spent on medical and dental or... ? Just want reasoning for line 15.

Can someone please advise on the possible scenarios?

Thanks

rfk

[Jesse]

The amount used to pay for qualified medical expenses are not taxable. The HSA plans have more freedom for the taxpayer to purchase items that are not qualified medical expenses.

For example if you go to the pharmacy to have prescriptions filled and while you're waiting for the RX to be filled you do a little browsing & grab some other items say gift ware or cleaning supplies and pay for it all with your debit card you now need to separate the qualified vs non-qualified expenses.

But if you have other qualified expenses that were not paid with the debit card you can add that to the total to cover the entire $1,119.42. That is, you don't need to use the actual debit card to pay for qualified expenses, but you do need receipts to cover the entire $1,119.42.