Frequently Asked Question 164

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Do I have to pay taxes on the distributions from my Health Savings Account (HSA)?

If you use a distribution from your HSA for qualified medical expenses, you do not pay tax on the distribution but you have to report the distribution on Form 8889.

If you do not use a distribution from your HSA for qualified medical expenses, you must pay tax on the distribution. An additional 10% tax may be due on the distribution, unless the taxpayer is disabled, has reached age 65 or has died.

Amounts that remain in your HSA at the end of the year are carried over to the next year and are not included in your income while they remain in the HSA.