I have a client who closed his Health Savings Account in 2021 and received a check for $560.47 for the balance in his account less closure fee. If he doesn't use this distribution from his HSA for qualified medical expenses, In addition to paying tax on the distribution, how much additional tax will he have to pay on the taxable distribution?
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Last edited by taxmcp; 06-30-2021, 06:35 PM. -
Did the taxpayer have any medical expenses in prior years for which he didn't take reimbursement? This distribution may qualify as reimbursing those."Taxation is the price we pay for failing to build a civilized society." ~ Mark Skousen -
Many HSAs have generous language for use of the money. I have seen one that allows for pedicure if you have brittle nails.Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDRComment
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All non qualified HSA distribution are tax as ordinary income. So whatever you client's tax bracket is that's the amount of tax on the distribution.This post is for discussion purposes only and should be verified with other sources before actual use.
Many times I post additional info on the post, Click on "message board" for updated content.Comment
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Maybe 10% if less than 59.5, but you'll have to look that up.
Can't he come up with $560 of qualified medical expenses? New glasses or prescription sun glasses. Stock up on his usual prescriptions. Annual physical. Chiropractor. Dentist. PT for that aching knee.Comment
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