What to Do with HSA on Your Taxes? - A Comprehensive Guide

When it comes to taxes and Health Savings Accounts (HSAs), it’s important to understand how they work together. HSAs offer a unique way to save for medical expenses while providing tax advantages. So, what should you do with your HSA when tax season rolls around?

As you prepare to file your taxes, here are some key points to keep in mind regarding your HSA:

• Contributions and Deductions: Your HSA contributions are tax-deductible, meaning you can lower your taxable income by contributing to your HSA.
• Employer Contributions: If your employer contributes to your HSA, those contributions are generally not included in your taxable income.
• Interest and Earnings: Any interest or earnings from investments in your HSA account are tax-free.
• Qualified Medical Expenses: Withdrawals from your HSA used for qualified medical expenses are tax-free.
• Tax Forms: You will receive a Form 1099-SA from your HSA provider detailing your withdrawals for the year.
• Reporting: When you file your taxes, you will need to report your HSA contributions and withdrawals on your tax return using Form 8889.
• Penalties: If you use HSA funds for non-qualified expenses before age 65, you may face penalties and taxes.

Remember, it’s essential to keep accurate records of your HSA transactions and consult a tax professional if you have any questions about how to handle your HSA on your taxes.

Tax season can be daunting, especially when it involves your Health Savings Account (HSA). It's crucial to comprehend how HSAs can benefit you this tax season.