Taxes 2022: You Still Have Time To Save Money on Taxes by Adding to Your HSA

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You still have time to reduce your taxable income before the April 18 deadline. One strategy is to add money to your Health Savings Account (HSA).

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“The IRA and HSA deadline is the tax filing deadline of April 18,” Eric Bronnenkant, head of tax at Betterment, told CBS MoneyWatch. “Once you have missed out on them, you can’t get them back again.”

An HSA is a tax-advantaged medical savings account that allows you to set money aside on a pre-tax basis to pay for qualified medical expenses. HSAs are used by taxpayers who are enrolled in high-deductible health plans. The IRS considers high-deductible plans to be any plan with a deductible of at least $1,400 for an individual or $2,800 for a family, CBS MoneyWatch reported.

According to the IRS, the 2021 annual limitation for an individual with self-only coverage under a high deductible health plan is $3,600. For an individual with family coverage under a high deductible health plan, the limit is $7,200. For the 2022 tax year, the self-only coverage will increase to $3,650 while family coverage will increase to $7,300.

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HSA contributions are tax-deductible, which reduces your taxable income by the amount that you contribute, CBS MoneyWatch noted. This money also grows tax-free and any funds that you withdraw to pay for eligible medical expenses are also tax-exempt.

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About the Author

Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but is now based out of Ohio where she attended The Ohio State University and lives with her two toddlers and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.
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