What percent is the additional tax on HSA if not used for medical expenses?

Health Savings Accounts (HSAs) are a great way to save money for medical expenses while enjoying tax benefits. However, if you withdraw funds for non-medical expenses, you may have to pay additional taxes. So, what percent is the additional tax on HSA if not used for medical expenses?

The additional tax on HSA funds used for non-medical expenses is typically 20%.

It's important to remember that HSAs are intended for qualified medical expenses, and using the funds for other purposes may result in penalties. Here are some key points to keep in mind:

• HSAs offer triple tax advantages: contributions are tax-deductible, earnings grow tax-free, and qualified withdrawals are tax-free.
• If you use HSA funds for non-medical expenses before age 65, you will owe income tax on the amount withdrawn plus an additional 20% penalty.
• After age 65, you can withdraw funds for non-medical expenses without the 20% penalty, but you will owe income tax on the withdrawn amount.

Health Savings Accounts (HSAs) provide an incredible opportunity to not only save money for your healthcare needs but also to enjoy significant tax advantages. However, it's crucial to understand the implications of withdrawing funds for non-medical expenses. If you do so, be prepared for the potential financial repercussions.