Can I Deduct HSA Contributions My S Corp Made?

When it comes to deducting HSA contributions made by your S Corp, there are certain rules and guidelines to be aware of. Health Savings Accounts (HSAs) are a popular way to save for medical expenses while enjoying tax benefits. Here's what you need to know:

1. Contributions made by your S Corp on your behalf are generally treated as employer contributions, not employee contributions.

2. Employer contributions to your HSA are not included in your gross income, which means they are not subject to federal income tax or FICA taxes.

3. As an employee, you cannot deduct employer contributions on your individual tax return since they are not considered your contributions.

4. However, your S Corp can deduct the contributions it makes to your HSA as a business expense on its tax return.

5. The total contribution limit for 2021 is $3,600 for individuals and $7,200 for families. If you are 55 or older, you can make an additional catch-up contribution of $1,000.

6. It's important to keep accurate records of HSA contributions made by your S Corp, as well as any withdrawals or qualified medical expenses paid for with HSA funds.

Always consult with a tax advisor or financial professional to ensure compliance with tax laws and regulations regarding HSA contributions.

When exploring the deductibility of HSA contributions made by your S Corp, it's essential to recognize the unique role they play in your overall tax strategy. HSAs offer an effective means to set aside funds for medical expenses while also gaining valuable tax breaks.