Question

• Carl, age 46, and Monica, age 42, are married and will le a joint return.

• They have two children, Adriane and Robert, whom they will claim as dependents on their joint return

• Monica’s cousin, Michael (age 29), came to live with them in July 2017 Michael’s gross income was $4,300 Monica and Carl did not provide over one-half of Michael’s support for the year but did pay $600 of Michael’s medical bills in November 2017

• Carl was enrolled all year in an HDHP with family coverage

• Carl has had an HSA for four years He has no other health insurance

• In 2017, Carl made regular contributions to his HSA totaling $4,000 2017, Carl took $1,800 from his HSA to pay the following medical expenses: – $300 to purchase Monica’s eyeglasses (needed for medical reasons) – $725 for long-term care insurance for Carl – $250 for over-the-counter eye medicine for their son, Robert (no prescription from doctor) – $525 for Adriane’s physical therapy sessions

• Carl, Monica, Adriane, Robert, and cousin Michael are all U S citizens and have valid Social Security numbers

1, Carl’s HSA deduction amount on Form 1040, line 25, is $_____

2. The amount Carl paid for long-term care insurance is a quali ed medical expense for HSA purposes

a True or b False

3. What is the total amount of unquali ed medical expenses paid by Carl for HSA purposes?

a $250 b $1,025 c $1,550 d $2,150

Answer 1

1. Carl’s HSA deduction amount on Form 1040, line 25, is $4000

(total HSA deduction amount is upto $6000 for contribution to HDHP with family coverage but as carl's contribution is $4000, so his deduction is limited to $4000)

2. True

(long-term care insurance along with other medical expenses is a qualified medical expense for HSA purposes)

3. answer is option A $250

expenses incurred on the for over-the-counter eye medicine for their son for which there is no prescription for doctor will be referred as unqualified expense.