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information, call
The First State
Bank at
800-482-7640
or email:
banking@fsb-wv.com.

 

Federal Tax Benefits for an HSA*

Contributions made to an HSA are fully tax deductible; the earnings grow tax deferred; and distributions for qualified medical expenses are tax free.

Contributions made by anyone excluding your employer may be deducted as long as they do not exceed the maximum annual contribution amount. Contributions from employers are not wages for federal income tax purposes.

Taxed HSA Distributions*

HSA distributions are used only to pay or reimburse qualified medical expenses incurred by you, your spouse, and your dependents. Expenses not qualified are not included in gross income.

Any other distributions are either included in income or rolled over. Distributions which do not roll over and are not used for paying or reimbursing qualified medical expenses are subject to taxation. A 10% tax will be charged unless distributions are made after your death, deal with your disability, or you have reached age 65.

Qualified medical expenses must only occur after the HSA has been established. The Internal Revenue Service (IRS) released Notice 2004-25 providing transition relief for the calender year 2004. This applies only to eligible individuals who establish an HSA on or before April 15, 2005.

*Consult a tax professional

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