Health Savings Account / IRS question (1 Viewer)

[Beef Ravioli Part 2]

Not sure if anyone can help me with this or not. I’ve googled and not found any answers that I think are clear. Same for my HSA response to my question.

I would like to buy an elliptical to help with weight loss and better overall health. Doctor has been on me for two years as I have severe sleep apnea.
Was hoping to use my HSA which is funded very well. Found out that exercise equipment is not recognized by the IRS to be purchased with an HSA but then I saw a doctors letter could make it possible.

I contacted my doctor and got a letter right away recommending this purchase.

I presented the letter to my HSA and they told me I am to hold on to the letter and have it available if I purchase something and the IRS audits me, I use that letter to defend my purchase.

Anyone ever go down this or similar pathway with HSA and IRS? If they were to reject the purchase and the letter, I would have to pay taxes on what I withdrew and a 20% fine so I would like to know what my possibilities are before making a purchase.

Thanks in advance!

 

[ChiefD]

If the IRS comes after you on THAT than I will send you $50 toward your fine.

 

[Buckna]

Best thing to do is leave the funds in and find a different way to pay for the purchase if you can. Then scan the receipt and Dr’s note and pay yourself back many years from now when the account has had lots of time to grow as you don’t pay any taxes upon withdrawal.

 

[arrow1]

I had someone ask me to write him a note to do this with a hot tub.

 

[Beef Ravioli Part 2]

I had someone ask me to write him a note to do this with a hot tub.

Did you?

 

[arrow1]

I had someone ask me to write him a note to do this with a hot tub.

Did you?

No, figured he was reaching a bit.

 

[Psychopav]

Best thing to do is leave the funds in and find a different way to pay for the purchase if you can. Then scan the receipt and Dr’s note and pay yourself back many years from now when the account has had lots of time to grow as you don’t pay any taxes upon withdrawal.

What I like about this solution is that, while the risk doesn't really change in this scenario, the magnitude of the bet does. The money you spend on an exercise machine today isn't going to be worth as much tomorrow, so waiting to claim the tax benefit carries less proportional risk to your overall financial picture than it does today. The dollars represented by that 20% won't be as big a deal to you 25 years from now...

 

[Beef Ravioli Part 2]

I had someone ask me to write him a note to do this with a hot tub.

Did you?

No, figured he was reaching a bit.

Are you a doctor or Physicians Assistant?

 

[kupcho1]

Best thing to do is leave the funds in and find a different way to pay for the purchase if you can. Then scan the receipt and Dr’s note and pay yourself back many years from now when the account has had lots of time to grow as you don’t pay any taxes upon withdrawal.

What I like about this solution is that, while the risk doesn't really change in this scenario, the magnitude of the bet does. The money you spend on an exercise machine today isn't going to be worth as much tomorrow, so waiting to claim the tax benefit carries less proportional risk to your overall financial picture than it does today. The dollars represented by that 20% won't be as big a deal to you 25 years from now...

This sounds nuts on so many levels.

If an elliptical was a legitimate expense to begin with, using the HSA to pay for it (unless I'm mistaken) has no tax penalty. That's pretty much what an HSA is for.

How much or how little the HSA has "to grow" is irrelevant w/r/t taxes. A legitimate HSA expense today vs. 20 years from now (unless tax law is retroactively changed) is the same: tax free.

The notion that this is somehow a bet is true in the sense that you're gambling with tax penalties should you use your HSA for a bogus expense. But the depreciation of the elliptical has absolutely no bearing on the risk of that gamble. Not sure how the magnitude of the gamble changes outside of changes to the tax penalty.

The risk stays the same despite the asset depreciating.

 

[arrow1]

I had someone ask me to write him a note to do this with a hot tub.

Did you?

No, figured he was reaching a bit.

Are you a doctor or Physicians Assistant?

Dr

 

[Beef Ravioli Part 2]

I had someone ask me to write him a note to do this with a hot tub.

Did you?

No, figured he was reaching a bit.

Are you a doctor or Physicians Assistant?

Dr

Thanks for weighing in then. Do you think this is a legit purchase then? My doctor didn’t hesitate with a letter after my request.

 

[Psychopav]

Best thing to do is leave the funds in and find a different way to pay for the purchase if you can. Then scan the receipt and Dr’s note and pay yourself back many years from now when the account has had lots of time to grow as you don’t pay any taxes upon withdrawal.

What I like about this solution is that, while the risk doesn't really change in this scenario, the magnitude of the bet does. The money you spend on an exercise machine today isn't going to be worth as much tomorrow, so waiting to claim the tax benefit carries less proportional risk to your overall financial picture than it does today. The dollars represented by that 20% won't be as big a deal to you 25 years from now...

This sounds nuts on so many levels.

If an elliptical was a legitimate expense to begin with, using the HSA to pay for it (unless I'm mistaken) has no tax penalty. That's pretty much what an HSA is for.

How much or how little the HSA has "to grow" is irrelevant w/r/t taxes. A legitimate HSA expense today vs. 20 years from now (unless tax law is retroactively changed) is the same: tax free.

The notion that this is somehow a bet is true in the sense that you're gambling with tax penalties should you use your HSA for a bogus expense. But the depreciation of the elliptical has absolutely no bearing on the risk of that gamble. Not sure how the magnitude of the gamble changes outside of changes to the tax penalty.

The risk stays the same despite the asset depreciating.

I suppose you have a point in that the relative value of the tax credit decreases as the relative value of the purchase decreases. And I should be clear that I am not suggesting it makes sense to gamble with tax penalties for a bogus expense if you KNOW it's a bogus expense, which would be unethical (not to mention unpatriotic).

 

[arrow1]

I had someone ask me to write him a note to do this with a hot tub.

Did you?

No, figured he was reaching a bit.

Are you a doctor or Physicians Assistant?

Dr

Thanks for weighing in then. Do you think this is a legit purchase then? My doctor didn’t hesitate with a letter after my request.

Yes, I do

 

[kupcho1]

Get yourself a Letter of Medical Necessity (LMN) documenting that exercise has been prescribed and you should be good to go.

 

[Navin Johnson]

I had someone ask me to write him a note to do this with a hot tub.

Did you?

No, figured he was reaching a bit.

disregard my pm

 

[Nick Vermeil]

I had someone ask me to write him a note to do this with a hot tub.

Did you?

No, figured he was reaching a bit.

Are you a doctor or Physicians Assistant?

Dr

Thanks for weighing in then. Do you think this is a legit purchase then? My doctor didn’t hesitate with a letter after my request.

I’m pretty sure furniture is not HSA eligible.