Do You Just Pay Taxes on Your Non-Eligible Expenses on a HSA?

When it comes to managing your HSA (Health Savings Account), understanding the tax implications of your expenses is crucial.

While HSAs offer great tax advantages, not all expenses qualify for tax-free withdrawals.

So, what happens if you use your HSA funds for non-eligible expenses?

When you use your HSA funds for non-eligible expenses, you will owe taxes on the amount withdrawn, along with a 20% penalty if you are under 65 years old.

It's essential to be mindful of how you spend your HSA funds to avoid unnecessary taxes and penalties.

Understanding the landscape of your HSA is fundamental, especially when addressing tax implications linked to non-eligible expenses. While HSAs are a remarkable tool for saving money for medical costs, it’s vital to remember that not every purchase qualifies for tax-free withdrawals.