Read this tip to make your life smarter, better, faster and wiser. LifeTips is the place to go when you need to know about Tax Deductions and other Taxes topics.
Contributions to a health savings account (HSA) are deductible when made on an after-tax basis. For example, an employee who participates in an employer-sponsored HSA would not qualify for a deduction if the employer makes contributions on a pre-tax basis—i.e., the employer does not take any taxes out of the money being used to make the contribution. Pre-tax contributions already result in a tax cut by lowering your taxable income. Deducting the contributions would be, in the eyes of the IRS, like having your cake and eating it too. On the other hand, if you are self-employed and make contributions to an HSA, those contributions would be among the allowable federal tax deductions. For more information on HSAs, read IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.
|Jennifer Mathes, Ph.D.|