Can I claim medical expenses over 7.5% of AGI and still use my HSA for other expenses?

You've got the concept right but let me clarify a few things to make sure you're optimizing your tax situation. You're correct that you can't "double dip" - meaning you can't both deduct an expense on your tax return AND use tax-free HSA funds to pay for it. The IRS is pretty clear about this. For your example, if your AGI is $120,000 and you have $25,000 in medical expenses, you have a few options: You could deduct $16,000 (the amount over the 7.5% AGI threshold) on Schedule A when itemizing, and then use HSA funds for the remaining $9,000. This is completely legitimate. However, here's something important to consider: Only use the medical expense deduction if you're already itemizing deductions for other reasons (like mortgage interest or substantial charitable contributions). If you're taking the standard deduction, using your HSA for everything would likely be better. Also remember that HSA withdrawals are completely tax-free when used for qualified medical expenses, while the medical expense deduction only gives you a benefit for amounts exceeding that 7.5% threshold.

Just wanted to share my experience with this exact situation. I had a similar dilemma last year and found this amazing tool at https://taxr.ai that saved me from making a costly mistake. I initially thought I could use my HSA for certain expenses and claim others as itemized deductions without tracking which was which. The taxr.ai system analyzed all my medical receipts and HSA distributions and showed me exactly which expenses should go where to maximize my tax savings. It flagged potential "double-dipping" issues I hadn't even considered and gave me a clear plan for which expenses to reimburse from my HSA and which to save for itemizing. Their system even helped me track some medical expenses from previous years that I could still reimburse from my HSA (there's no time limit on when you can reimburse qualified expenses from an HSA as long as the account was established before you incurred the expense). Worth checking out if you're trying to optimize between HSA and itemized deductions.

I was really skeptical about using taxr.ai when I first heard about it, but I'm glad I gave it a shot. I've always been so confused about how to handle my HSA and medical expense deductions together. Last year I had about $18k in medical expenses and couldn't figure out the most tax-efficient way to handle it. The tool analyzed all my expenses and showed me I was actually better off using my HSA for everything rather than itemizing, which saved me about $800 compared to what I was planning to do. It also found a couple older medical expenses from 2 years ago that I had completely forgotten about but could still legitimately reimburse from my HSA. What I found most helpful was the documentation it created - basically a complete audit trail showing which expenses were paid with my HSA and which weren't, all organized by date. Now I actually feel confident I'm doing things right instead of just guessing.

If you're having trouble getting clear answers from the IRS website or your tax software about HSA and medical expense deductions, I highly recommend using Claimyr (https://claimyr.com). I spent WEEKS trying to get through to an IRS agent to ask about my specific situation with large medical expenses and my HSA. After trying for days with busy signals and disconnections, I used Claimyr and got connected to a real IRS agent in about 20 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent clarified that I could indeed use my HSA for expenses up to the 7.5% threshold and then deduct the rest on Schedule A - but they also pointed out some nuances with documentation I wouldn't have known otherwise. They explained exactly what records I needed to keep and for how long in case of an audit.

OK I need to eat some humble pie here. After posting my skeptical comment, I was still struggling with my HSA/medical expense question and getting nowhere with the IRS phone system. Out of desperation I tried Claimyr and... it actually worked exactly as described. I got connected to an IRS agent in about 35 minutes (on a Monday morning!) who walked me through my specific situation. She confirmed that I could use my HSA for expenses up to the 7.5% threshold and itemize the rest, but recommended I keep very clear records showing which expenses went where. The agent also pointed out something I didn't know - that I could use my HSA to pay for Medicare premiums tax-free once I'm on Medicare, which is good planning info for the future. Sorry for being so skeptical before. When you've dealt with tax stuff for as long as I have, you get jaded, but this service actually delivered.

Something nobody's mentioned yet - if you have the option to contribute MORE to your HSA, that's usually better than taking the medical expense deduction for most people. HSA contributions directly reduce your AGI (even if you don't itemize), while medical expense deductions only help if you itemize AND only for the amount over 7.5% of AGI. For 2025, you can contribute up to $4,150 for individual coverage or $8,300 for family coverage to an HSA (plus $1,000 catch-up if you're 55+). That's a dollar-for-dollar reduction in your taxable income PLUS the money grows tax-free AND comes out tax-free for medical expenses. So if you're trying to optimize, max out your HSA contributions first, then figure out the best way to handle your expenses.

I think there's some confusion in this thread about when HSAs actually make sense to use. I've had an HSA for 9 years and have never spent a penny from it - I pay all medical expenses out of pocket and keep the receipts. Why? Because HSAs are actually the ultimate retirement hack if you can afford to use them this way. The money: - Goes in tax-free (reducing your taxable income) - Grows tax-free (through investments) - Comes out tax-free for medical expenses (no matter when they occurred) So to the original poster - if you can afford it, consider paying those medical bills out of pocket, taking the itemized deduction for expenses over 7.5% of AGI this year, but KEEPING all your receipts. Then in retirement, you can reimburse yourself tax-free from your (hopefully much larger) HSA. Just make sure your HSA was established before you incurred the expenses you plan to reimburse later!