HSAs and tax season

Narrator:

Want to save money on taxes? It’s easy with your health savings account or HSA. With your HSA you can save on taxes 3 different ways. First, contributions to your HSA are tax advantaged. Second any money you take out of your account to pay for qualified medical expenses is also income tax free. Third, any money you save or invest potentially grows income tax free.

And what happens when you make a post-tax contribution to your HSA? Don’t worry you will receive those tax benefits at tax time when you file your income taxes. Add it all up and it’s more money for you and less for Uncle Sam.

When it comes time to do your taxes you’ll have to gather some information about your HSA. It’s pretty simple. You need to know about 3 IRS Forms, linked to health savings accounts. Form 1099-SA tells you the total distributions or payments that were made from your HSA. Form 5498-SA summarizes the contributions or deposits you made to your HSA in a particular tax year. You can also find your contribution information on your December HSA statement. Form 8889 this is the form you’ll submit with your federal income tax return. This could be filled out using the information from your 1099-SA and 5498-SA.

Keep in mind everyone receives Form 5498. But you’ll only receive form 1099 if you had distributions that year. If you didn’t reach a maximum contribution limit but want to capitalize on the potential tax savings it’s no problem. You generally have until the tax filing deadline to make a contribution to your HSA for the previous tax year.

Make sure you understand the HSA rules where you live. Certain states have special rules regarding HSA’s so it’s a good idea to touch base with a tax adviser to ensure you’re filing your taxes correctly. Additional help and resources are available online at IRS.gov or at optumfinancial.com

Save smart, save tax free.