Can an HSA Be Funded with Unearned Income?

Can an HSA Be Funded with Unearned Income?

One common question that arises when considering Health Savings Accounts (HSAs) is whether they can be funded with unearned income. In simple terms, an HSA can only be funded with earned income, not unearned income. Earned income refers to money you receive from working or providing services, such as wages, salaries, tips, and self-employment income.

On the other hand, unearned income includes sources like interest, dividends, capital gains, rental income, and retirement income, which cannot be used to contribute to an HSA.

Key Points to Remember:

• HSAs can only be funded with earned income.
• Unearned income, such as interest, dividends, and capital gains, cannot be used to contribute to an HSA.
• Earned income comprises wages, salaries, tips, and self-employment income.
• It's important to distinguish between earned and unearned income when funding an HSA.

Can an HSA Be Funded with Unearned Income?

Is your mind buzzing with questions about Health Savings Accounts (HSAs) and their funding? You might wonder if you can use unearned income to contribute. It’s a common misconception! In fact, HSAs can only be funded by earned income, which is the money you make through active work, like wages or self-employment.

Conversely, unearned income includes earnings from sources such as interest, dividends, and capital gains. Unfortunately, these cannot be used to make contributions to your HSA!