Savings

I use a health savings account. When can I deduct medical expenses?

Q. I use a Health Savings Account (HSA) for medical expenses. This year, I’m going to use it all and more. When can I deduct medical expenses?

— Fed up with taxes

A. Health Savings Accounts (HSA) give you the opportunity to put money aside before it is taxed.

It’s a big saving if you have one available.

If you are using your HSA, then all medical fees would accrue above the HSA – expenses you pay out of pocket – and if the expenses exceed 7.5% of your adjusted gross income, then you can deduct the excess as an itemized deduction on your tax return, by assuming you can detail, said Kenneth Bagner, chartered accountant at Sobel and Co. in Livingston.

In New Jersey, medical fees that exceed 2% of your income can be deducted, he said.

For federal purposes, adjusted gross income (AGI) is defined as gross income less adjustments to income, Bagner said. Gross income includes your salaries, dividends, capital gains, business income, pension distributions and other income. Income adjustments include things like educator expenses, student loan interest, alimony payments or contributions to a retirement account, he said.

“For 2022, you must have itemized deductions of at least $12,950 for a single or $25,900 for a married spouse in order to itemize your personal tax return,” he said. “Remember that state and local tax deductions are limited to $10,000 per year, which includes property taxes, so you need other deductions such as medical above 7.5%, mortgage interest and charitable contributions to detail.

Send your questions to [email protected].

Karin Price Mueller writes the Bamboos column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. To find NJMoneyHelp on Facebook. Register for NJMoneyHelp.comit is weekly e-newsletter.