I saw the HSA FAQ thread, but that appeared to be related to where to take an HSA account out, and how to maximize the account with interest. That thread will be very useful to expand the possibility of returning a decent amount of money from the HSA.
I am looking at signing up this year, as it obviously make a lot of sense to supplement a healthcare plan. But I'm thinking about maxing out the contributions. In true Fatwallet spirit, I'm looking for ways to maximize the possibility of tax free dollars, but want to make sure that it's legal.
It would seem that it's pretty easy to take money out of the HSA and utilizing "instant rebates" or such on diabeties testing machines. Almost every week, there are multiple drug stores that offer these, and it would seem that would present an opportunity to take out a significant amount of money from the HSA over the course of the year and turn it into "tax free" dollars. I'm not sure how the laws look at rebates or coupons, but I seem to recall when doing deals at CVS a while ago, the HSA savings showed up as the amount pre-coupon / instant rebate. Of course regular rebates apply too, but there are only so many of those you can do in a year.
This may not be FW finance worthy, but since many go after the Gold coins for a small percentage back on their CC, this has the possibility, if I'm looking at all the factors correctly, to return much more than that.
Edit: I actually confused the HSA with an FSA, which just opened my eyes to another option. Sorry for the mix up in the two unique plans. The FSA is a use it or lose it, and an HSA is there for the duration and available for withdrawal after 65.
The easiest way to defraud HSA/FSA is to max them out, buy stuff, submit receipts and return it for cash.
Stinger2
Member
posted: Nov. 3, 2009 @ 7:03p
bombcar said: Hmmm. In this thread we try tax fraud for a few dollars!
#1). I am not a tax expert, therefore I am asking if it is indeed fraud. Notice the question mark in the topic? If I receive a rebate from a manufacturer, or use a coupon, does that mean I cannot claim the price of the item. I ask because the drugstores typically do not include discounts or coupons when totaling the FSA amount on their receipt, which leads me to believe they consider the discounts separate.
#2). Coming from the same forum that bulk purchases gold coins for a 1% to 3% return with CC rewards, I would hardly consider tax free (Federal, State and SS) 5-6k as a "few dollars".
If I used a coupon to purchase clothing that I later donated, would FMV be the value MINUS the coupon I originally used? Logic would dictate that this is a similar type situation. I appreciate the responses, but can anyone tell me if this is actually fraud, and if so, how does it differ from the above example?
Stinger2 said: #2). Coming from the same forum that bulk purchases gold coins for a 1% to 3% return with CC rewards, I would hardly consider tax free (Federal, State and SS) 5-6k as a "few dollars".
We buy bulk $1 coins, not gold coins. We do this to help circulate them through the economy.
Stinger2 said: If I used a coupon to purchase clothing that I later donated, would FMV be the value MINUS the coupon I originally used?
The FMV of your used clothing is going to be much less than whatever you paid even with coupons. That being said, FMV has nothing to do with cost basis of purchase. If I buy $10k worth of stocks today and in 30 years they are worth $50k I can donate the FMV of $50k and get a $50k writeoff. The initial cost basis of a donation has nothing to do with the FMV.
Please disconnect your keyboard. Read more, post less.
Stinger2
Member
posted: Nov. 3, 2009 @ 7:32p
tripleB said: Stinger2 said: #1). I am not a tax expert
Clearly.
Stinger2 said: #2). Coming from the same forum that bulk purchases gold coins for a 1% to 3% return with CC rewards, I would hardly consider tax free (Federal, State and SS) 5-6k as a "few dollars".
We buy bulk $1 coins, not gold coins. We do this to help circulate them through the economy.
Stinger2 said: If I used a coupon to purchase clothing that I later donated, would FMV be the value MINUS the coupon I originally used?
The FMV of your used clothing is going to be much less than whatever you paid even with coupons. That being said, FMV has nothing to do with cost basis of purchase. If I buy $10k worth of stocks today and in 30 years they are worth $50k I can donate the FMV of $50k and get a $50k writeoff. The initial cost basis of a donation has nothing to do with the FMV.
Please disconnect your keyboard. Read more, post less.
I think the words you're looking for are: "I don't know". But thanks for your response. Now if SIS has the same response, I will gracefully bow out.
Stinger2 said: I think the words you're looking for are: "I don't know". But thanks for your response. Now if SIS has the same response, I will gracefully bow out.
If all you care to hear from is SIS you can always send him a private message with your question
Stinger2 said: bombcar said: Hmmm. In this thread we try tax fraud for a few dollars!
#1). I am not a tax expert, therefore I am asking if it is indeed fraud. Notice the question mark in the topic? If I receive a rebate from a manufacturer, or use a coupon, does that mean I cannot claim the price of the item. I ask because the drugstores typically do not include discounts or coupons when totaling the FSA amount on their receipt, which leads me to believe they consider the discounts separate.
#2). Coming from the same forum that bulk purchases gold coins for a 1% to 3% return with CC rewards, I would hardly consider tax free (Federal, State and SS) 5-6k as a "few dollars".
If I used a coupon to purchase clothing that I later donated, would FMV be the value MINUS the coupon I originally used? Logic would dictate that this is a similar type situation. I appreciate the responses, but can anyone tell me if this is actually fraud, and if so, how does it differ from the above example?If you receive a rebate, use a coupon, or otherwise get a reduction in the amount you pay for an item, that reduces your cost basis in the items purchased. The same goes for returning the item. Just because you kept a copy of the receipt showing the items you paid for and then later return does not mean that you have eligible expenses.
Your question you ask in your topic title is crazy. There is no gray area in what you are proposing and there is nothing legal about it.
Stinger2 said: #1). I am not a tax expert, therefore I am asking if it is indeed fraud. Notice the question mark in the topic? If I receive a rebate from a manufacturer, or use a coupon, does that mean I cannot claim the price of the item. I ask because the drugstores typically do not include discounts or coupons when totaling the FSA amount on their receipt, which leads me to believe they consider the discounts separate.
Generally that is the case, the FSA amount is the maximum of the price of the item prior to coupons being applied or the amount spent out of pocket.
If you are going to do fake receipts, be advised that most doctor's offices have receipts that come out of laser printers. I think the IRS should require EINs on all FSA-reimbursable receipts above a certain amount. They've done that for the Dependent Care FSAs and it seems to have cut the instance of fraud there to virtually zero.
Stinger2
Member
posted: Nov. 3, 2009 @ 11:21p
Ok, so how would I go about submitting the receipt for my Contact lenses that I had $100 worth of rebates on? Do they have forms to specify the actual amount paid less rebate? I was under the impression that you simply submit a receipt for reimbursement.
I don't follow your logic, theman2.. Your comparison of returning an item and being fraudulant is very far from what I am suggesting. When I purchase a product and receive a rebate or other incentive from either a store or company selling the product, can you explain how that might differ from a travel award program or CC reward? When I submit my work expenses for travel, should I be calculating the percentage I get back on my credit cards, and other travel perks? Expand your minds people.. I know the IRS is clear on CC % and travel perks not being taxable yet, but is there clearcut info for an HSA / FSA and rebates? If you believe it's fraudulant, please help me understand why, instead of using flawed logic.
In my eyes a rebate / store reward is no different than travel awards and CC rewards, so that was where I was originally going with this thread in looking for other opinions. I was hoping for an out of box discussion, or at the very least a chance of pointing me in the direction on why they wouldn't be included. Any responses based on facts would be extremely appreciated.
I've learned a lot about HSAs / FSAs today, never knew the difference previously. Not sure why more people with a decent income wouldn't opt for a high-deductable healthcare plan and supplement with an HSA, which will have a 6150 family limit in 2010. This is the health care reform we need... It promotes people to spend responsibly and eliminate needless visits to the doctor or ER for colds or such. I see a high deductable / HSA combo as a form of self-insurance with very little downside if your risk is limited.
Stinger2
Member
posted: Nov. 3, 2009 @ 11:27p
calwatch said:
Generally that is the case, the FSA amount is the maximum of the price of the item prior to coupons being applied or the amount spent out of pocket.
If you are going to do fake receipts, be advised that most doctor's offices have receipts that come out of laser printers. I think the IRS should require EINs on all FSA-reimbursable receipts above a certain amount. They've done that for the Dependent Care FSAs and it seems to have cut the instance of fraud there to virtually zero.
Thank you very much for the response!!! So, since the FSA amount on the receipt for drugstores is before coupons or store rebates are applied, is it acceptable to submit them as such (again people, think travel awards and CC rebates)? Everyone appears to think this is a thread to promote fraudulant activity, but that is exactly what I'm looking to avoid. My previous message explains my reasoning, but with so many stores not showing coupons / rebates in the FSA amount, that would appear to indicate it *IS* acceptable to submit that amount!
Fake receipts shouldn't even be discussed, while my topic title might have prompted the hurried accusations of fraud, that is not the intent.
Stinger2 said: Ok, so how would I go about submitting the receipt for my Contact lenses that I had $100 worth of rebates on? Do they have forms to specify the actual amount paid less rebate? I was under the impression that you simply submit a receipt for reimbursement.
I don't follow your logic, theman2.. Your comparison of returning an item and being fraudulant is very far from what I am suggesting. When I purchase a product and receive a rebate or other incentive from either a store or company selling the product, can you explain how that might differ from a travel award program or CC reward? When I submit my work expenses for travel, should I be calculating the percentage I get back on my credit cards, and other travel perks? Expand your minds people.. I know the IRS is clear on CC % and travel perks not being taxable yet, but is there clearcut info for an HSA / FSA and rebates? If you believe it's fraudulant, please help me understand why, instead of using flawed logic.
In my eyes a rebate / store reward is no different than travel awards and CC rewards, so that was where I was originally going with this thread in looking for other opinions. I was hoping for an out of box discussion, or at the very least a chance of pointing me in the direction on why they wouldn't be included. Any responses based on facts would be extremely appreciated.
I've learned a lot about HSAs / FSAs today, never knew the difference previously. Not sure why more people with a decent income wouldn't opt for a high-deductable healthcare plan and supplement with an HSA, which will have a 6150 family limit in 2010. This is the health care reform we need... It promotes people to spend responsibly and eliminate needless visits to the doctor or ER for colds or such. I see a high deductable / HSA combo as a form of self-insurance with very little downside if your risk is limited.Read what I posted before:
If you receive a rebate, use a coupon, or otherwise get a reduction in the amount you pay for an item, that reduces your cost basis in the items purchased. The same goes for returning the item.
The IRS treats rebates as a reduction of the cost.
With regards to travel awards and CC rewards, the IRS basically considers anything with a determinable value (like CashBack) as a rebate. They have a harder time with things like mileage rewards because the value is hard to determine. If most of your expenses are personal nondeductible items, it doesn't matter what you get back. Technically, if you are running business expenses on a credit card, you would be reducing the costs by the CashBack.
I'd suggest first focusing on the tax benefits of contributing to a HSA account and doing the normal FWF things one does to come out ahead financially. Contribute the maximum to the extent you can afford and to the extent you expect to spend the money at some point in the future. Spend money on the medical expenses that are worth doing and try to get everything done as inexpensively as possible. It shouldn't be that hard to get enough qualified medical expenses during your life to use whatever you put into the account without doing anything illegal. Why risk crossing that line when you don't even need to?
Whatever you decide to put on your tax return is between you and the IRS.
how could it possibly be unethical to look for ways to get around having the govt steal your money by force? (aka taxes) i think you're on to something
#2). Coming from the same forum that bulk purchases gold coins for a 1% to 3% return with CC rewards, I would hardly consider tax free (Federal, State and SS) 5-6k as a "few dollars".
#2). Coming from the same forum that bulk purchases gold coins for a 1% to 3% return with CC rewards, I would hardly consider tax free (Federal, State and SS) 5-6k as a "few dollars".
We buy bulk $1 coins, not gold coins. We do this to help circulate them through the economy.
LiesMy understanding is that if you wanted to buy gold coins the FWF way, you would have been buying them off eBay when the bing CashBack promotions were going on. Actually, the FWF way probably would have been to sell gold coins during that time on eBay for a premium...
Be sure to check with your FSA administrator about how many diabetic testing machines are allowed in a year. They may not allow beyond a "fair use" number.
And while you are at it, be sure to claim mileage to/from the store where you bought the item (if you used your car to go there). It's perfectly legal and ethical.
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