How is HSA triple tax advantaged on Reddit?
Asked by: Miss Emelie Walsh IV | Last update: May 16, 2025Score: 4.1/5 (45 votes)
Does HSA help with taxes on Reddit?
HSA contributions are pre-tax (or for you since it's not from your employer directly, they are tax deductible). So contributing to an HSA will lower your taxable income for the year. Lower taxable income = lower tax liability.
How to avoid 6% tax on HSA?
- Withdraw the excess funds. To avoid a penalty, you can withdraw excess contributions from your account before the deadline to file taxes. ...
- Deduct the excess contribution in a later year.
Is HSA triple tax advantage better than 401k?
Comparing HSAs and 401(k)s
The triple-tax-free aspect of an HSA makes it better for tax management than a 401(k). However, since HSA withdrawals can only be used for healthcare costs, the 401(k) is a more flexible retirement savings tool. The fact that an HSA has no RMD gives it more flexibility than a 401(k).
What is the point of HSA on Reddit?
Basically, you put money into the HSA pre-tax, which lowers your taxable income. Then, you can use that money tax-free for eligible medical expenses, like doctor visits, prescriptions, and even some over-the-counter meds.
Is A Health Savings Account Worth It On Reddit? - AssetsandOpportunity.org
How is HSA triple tax advantaged?
Health Savings Accounts offer a triple-tax advantage* – deposits are tax-deductible, growth is tax-deferred, and spending is tax-free. All contributions to your HSA are tax-deducible, or if made through payroll deductions, are pre-tax which lowers your overall taxable income.
What is the downside of an HSA?
Drawbacks of HSAs include tax penalties for nonmedical expenses before age 65, and contributions made to the HSA within six months of applying for Social Security benefits may be subject to penalties. HSAs have fewer limitations and more tax advantages than flexible spending accounts (FSAs).
How much will HSA reduce my taxes?
For example, If you're in the 24% marginal federal income tax bracket, every $1,000 you contribute to an HSA saves you $240 in income taxes. A family contributing the current (2023) maximum to an HSA in the 24% marginal income tax bracket can save up to $1,860.
Is it smart to max out your HSA?
If you're able to make the maximum contribution each year, then it's suggested that you do so. Some years you may need to use more of your HSA contributions than other years. Just remember, there's no yearly minimum you have to spend from your HSA and your entire HSA automatically rolls over each year.
Can HSA be used for dental?
Yes, you can use a health savings account (HSA) or flexible spending account (FSA) for dental expenses.
What is the tax loophole for HSA?
The ultimate loophole available to almost everyone under the age of 65 in our tax code is the Health Savings Account (HSA). It is the only account you can contribute to and deduct the contribution and then withdraw the money tax free. Think about that, a tax deduction going in and no taxes going out.
Does the IRS check your HSA?
Does HSA spending trigger an audit? The IRS doesn't monitor how you spend your HSA funds throughout the year, but that doesn't mean they won't ask for proof that your expenses were eligible. And if your tax return contains unrelated IRS audit red flags, your risk for an HSA audit could increase.
Why do I owe more taxes with HSA?
If you use your HSA money to pay for anything other than a qualified medical expense, and you're under the age of 65, you'll have to add the amount you used to your taxable income on your tax return. Then you'll have to pay an additional 20 percent tax penalty on that amount.
Does HSA hurt tax return?
How does my Health Savings Account affect my taxes? A Health Savings Account (HSA) is a way to save money to pay for medical expenses and costs. Contributions are tax-free, and you're not taxed on money used for qualifying medical expenses, either.
Does IRS ask for HSA receipts?
The IRS requires that you keep receipts for all your Health Savings Account (HSA) spending. HSA distributions (money taken from an HSA account) are nontaxable, but only when the money is used to pay for qualified medical expenses.
How does an HSA work for dummies?
A Health Savings Account (HSA) is a type of personal savings account you can set up to pay certain health care costs. An HSA allows you to put money away and withdraw it tax free, as long as you use it for qualified medical expenses, like deductibles, copayments, coinsurance, and more.
Is it better to max out HSA or 401k?
First off, most experts would recommend maxing out HSA contributions before maxing out 401(k) contributions because of the tax advantages that come with the HSA. There's no minimum age for HSA fund distributions, so when you need it to spend money on health care, it's got your back.
What are the tax secrets of HSA?
As a quick refresher, HSAs offer three major benefits for federal income taxes: Contributions reduce your taxable income without having to itemize deductions. Growth of the account is tax-deferred. Distributions for qualified medical expenses—for you and your family—are tax-free.
What are the tax disadvantages of HSA?
While you can use your HSA to pay or be reimbursed for qualified medical expenses, if you receive distributions for other reasons, the amount you withdraw will be subject to federal income tax and may be subject to an additional 20% federal tax.
Should I max out my HSA every year?
Max out your contributions if you can
If you're able, consider contributing the annual maximum amount. The more you can contribute, the more you can benefit from the HSA's potential tax advantages.
Is HSA triple tax advantage?
HSAs are savings vehicles that offer a triple tax advantage: Contributions go into the HSA tax-free If you make contributions through payroll deductions, they are also not subject to Social Security or Medicare taxes. You can invest that money and enjoy tax-free growth potential.
Does HSA really save money?
While you have the flexibility to withdraw as little or as much as you need to help pay for health care expenses, the HSA is really designed to help you save money and build up your balance so that you're prepared for future health care expenses, including in retirement when you're likely to have more medical expenses ...
When should I stop contributing to my HSA?
Once you turn 65, you can use the money in your HSA for anything you want. If you don't use it for qualified medical expenses, it counts as income when you file your taxes. Six months before you retire or get Medicare benefits, you must stop contributing to your HSA.
Do I ever lose my HSA money?
Myth #2: If I don't spend all my funds this year, I lose it. Reality: HSA funds never expire. When it comes to the HSA, there's no use-it-or-lose-it rule. Unlike Flexible Spending Account (FSA) funds, you keep your HSA dollars forever, even if you change employers, health plans, or retire.