What Happens if You Contribute $0 to HSA but Withdraw Money?

Health Savings Accounts (HSAs) are a great tool for saving money for medical expenses while enjoying tax advantages. But what happens if you contribute $0 to your HSA account but decide to withdraw money?

When you withdraw money from your HSA without any contributions made, here's what you need to know:

• If you have not contributed anything to your HSA, the amount you withdraw will be considered as taxable income.
• You may also be subject to an additional 20% penalty tax on the withdrawn amount for non-qualified medical expenses.
• It is crucial to keep track of your HSA contributions and ensure that you have sufficient funds in your account before making any withdrawals.
• If you withdraw funds for qualified medical expenses, ensure that you have proper documentation to support the expenses.

It's important to understand the implications of withdrawing money from your HSA without contributions to avoid any tax penalties or issues with the IRS.

When dealing with a Health Savings Account (HSA), it's important to remember that withdrawing funds from your HSA without having made contributions can lead to tax liabilities. If you attempt to withdraw funds without any contributions, the IRS will consider that amount as taxable income, meaning you'll owe taxes on it during tax season.