Understanding HSA Deductions and Distributions: An Essential Guide for Savvy Users

Health Savings Accounts (HSAs) are a tax-advantaged way to save for medical expenses. One of the key benefits of an HSA is the ability to make tax-deductible contributions and take tax-free distributions for qualified medical expenses.

When it comes to HSA deductions and distributions, it's essential to understand the rules and guidelines to make the most of your account. Here's what you need to know:

• HSA Deductions:
• Contributions to your HSA are tax-deductible, meaning you can reduce your taxable income by the amount you contribute to the account.
• For 2021, individuals can contribute up to $3,600, and families can contribute up to $7,200, with an additional $1,000 catch-up contribution for those 55 and older.
• HSA Distributions:
• When you use funds from your HSA for qualified medical expenses, the distributions are tax-free. This means you don't pay any taxes on the money you withdraw for medical needs.
• Qualified medical expenses include a wide range of services, such as doctor visits, prescription medications, and certain medical supplies.

Health Savings Accounts (HSAs) are a tax-advantaged way to save for medical expenses, allowing you to build a safety net for your health needs. Remember, one of the key benefits of an HSA is that contributions you make are tax-deductible.