To maximize your HSA during tax season, you should review contribution limits, account for employer contributions, and fund your account before the tax deadline. Properly filing forms like IRS Form 8889 and tracking qualified medical expenses helps you get the full tax benefits your Health Savings Account (HSA) offers.
What should be on my HSA tax checklist?
An effective HSA tax checklist helps you maximize savings and avoid penalties. Key steps include confirming your contribution limit, gathering tax forms (1099-SA and 5498-SA), and updating beneficiary details.
10 Simple Steps to Maximize Your HSA Savings
Tax season can sometimes feel overwhelming, but your HSA can make things easier — and save you money. Whether you’re new to HSAs or just need a refresher, this checklist will guide you through everything you need to do to help maximize your tax savings and prepare for the year ahead.
1. Review HSA Contribution Limits
Every year, the IRS sets limits on how much you can contribute to your HSA. These limits depend on your health insurance plan (individual or family coverage) and your age. If you’re 55 or older, you can contribute an extra $1,000 through catch-up contributions.
Log into your online account to check how much you’ve already contributed, then compare that to the limit to see if you have room to add more funds.
2. Confirm Employer Contributions
Many employers sweeten the deal by contributing to your HSA, but don’t forget — those contributions count toward your annual limit. For example, if your employer added $1,000 to your HSA, you’ll need to subtract that amount from the limit to calculate how much more you can personally contribute.
Your HealthEquity online account will show you a breakdown of employer contributions versus contributions you make on your own.
3. Lower Your Tax Bill with a One-Time HSA Contribution
Here’s a tip that could save you money: You can still contribute to your HSA for the previous tax year until the tax-filing deadline. That means you can make a 2025 contribution until April 15, 2026. If you haven’t hit the contribution limit yet, this is your chance to lower your taxable income and save big.
For example, if your effective tax rate is 20%, every $1,000 you contribute could save you $200 in taxes. That’s a significant benefit for simply moving money into your HSA.
4. Gather Your HSA Tax Forms
Tax filing requires paperwork, and your HSA is no exception. There are key forms to watch for:
- Form 1099-SA: This shows any withdrawals (distributions) you made from your HSA. If you didn’t take any money out, you won’t receive this form.
- Form 5498-SA: This summarizes how much you contributed during the year. You’ll typically receive it after the tax-filing deadline, but don’t worry — it’s for your records and doesn’t need to be filed with your taxes.
Make sure you have these forms on hand when completing your tax return. You can learn more about HSA tax forms by visiting our HSA Tax Center.
5. Track Qualified Medical Expenses
Your HSA funds must be used for qualified medical expenses to avoid penalties. These include costs like doctor visits, prescriptions, and even some over-the-counter items. Plus, your HSA covers eligible dental and vision expenses too.
To stay organized, keep all receipts for any HSA distributions. The IRS may ask for proof if you’re ever audited, and having your documentation ready can save you time and stress. Consider using the HealthEquity mobile app to snap a picture and upload receipts.
6. Update Your Beneficiary Information
Your HSA isn’t just for you — it can also help your loved ones if something happens to you. Make sure your beneficiary information is up to date, especially if you’ve recently experienced a life change like getting married, divorced, or having children.
You can easily update your beneficiary information in your HealthEquity online account.
7. Plan for Future Contributions
Once tax season is behind you, take a moment to plan for the year ahead. Setting up automatic payroll deductions is one of the easiest ways to make steady contributions to your HSA. You can decide how much to contribute each paycheck, helping you spread out the savings over the year.
Not sure how much to contribute? Check out this article: How much should I contribute to my Health Savings Account?
8. Double Check State Tax Rules
Although HSAs are federally tax-free, a few states have different rules. Some states (like California, New Jersey, New Hampshire, and Tennessee) may tax contributions or the interest and investment earnings in your account. If you live in one of these states, it’s worth consulting a tax advisor to understand your local rules.
9. Evaluate Your HSA Investment Strategy
Did you know you can invest your HSA funds? Once your balance reaches a certain threshold, you can invest in mutual funds.
If you’re already investing, tax season is a great time to review your portfolio. Does it align with your goals? Are you comfortable with the level of risk? Small adjustments can help your HSA better serve your health needs and long-term financial wellbeing.
10. File Your Taxes Correctly
When it’s time to file, you’ll need to report your HSA activity. Use IRS Form 8889 to document your contributions and distributions. If you’re using tax software, it will guide you through this step.
Double-check that your contributions match your records and ensure any distributions were for qualified medical expenses. Accuracy here can help you avoid any future issues.
Make the Most of Your Health Savings Account (HSA)
Your HSA is more than just a savings account — it’s a powerful tool for lowering taxes, preparing for medical expenses, and even investing for the future. By following this checklist, you can make the most of your account while reducing the stress of tax season. Remember, each step you take could benefit your financial wellbeing.
Take it one at a time, and don’t hesitate to reach out to a professional if you have questions. You’ve got this!
Frequently Asked Questions
Q: Can I contribute to my HSA for the previous year after December 31?
A: Yes, you can contribute to your HSA for the previous tax year up until the tax filing deadline, typically April 15. This allows you to maximize your tax deductions for that year. In your online account, you can designate the previous tax year for your contribution.
Q: Do I need to submit receipts with my tax return for HSA purchases?
A: No, you do not need to submit receipts with your tax return. However, you must keep them for your records in case the IRS audits your return to verify that distributions were for qualified medical expenses.
Q: What happens if I contribute too much to my HSA?
A: If you exceed the contribution limit, you must withdraw the excess amount and any earnings on it before the tax deadline to avoid a 6% excise tax. If left in the account, the penalty applies every year the excess remains.
HealthEquity does not provide legal, tax or financial advice. Always consult a professional when making life-changing decisions.
1HSAs are never taxed at a federal income tax level when used appropriately for qualified medical expenses. Also, most states recognize HSA funds as tax-deductible with very few exceptions. Please consult a tax advisor regarding your state’s specific rules.
2Estimated savings are based on an assumed combined federal and state income tax rate of 20%. Actual savings will vary based on your taxable income and tax status.
3Investments are subject to risk, including the possible loss of the principal invested, and are not FDIC or NCUA insured, or guaranteed by HealthEquity, Inc. Investing through the HealthEquity investment platform is subject to the terms and conditions of the Health Savings Account Custodial Agreement and any applicable investment supplement. Investing may not be suitable for everyone and before making any investments, review the fund’s prospectus.
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