Taxpayers who are members of a health plan with a high deductible may be eligible to contribute to a health savings account. This type of account saves some of your money for future use on a range of medical expenses. Contributions made into your health savings account are tax-deductible, and investment earnings are tax-free, along with withdrawals taken for eligible medical costs.
There is a limit on how much you can contribute to your HSA, relative to inflation and the type of health plan you are enrolled in. This tax year, the amount you can contribute as a single adult is $3,400, while the threshold for families is $6,750. Taxpayers over the age of 55 are eligible to contribute up to $1,000 in additional funds to their HSA.
If your high-deductible health plan is part of an employer sponsored program, you may be able to set up contributions from your paycheck directly to your HSA, which means the money will not be taxed prior to being contributed. For those who make contributions to their HSA directly, there’s a deduction which can be claimed at time. You aren’t required to itemize if you wish to claim the deduction. You just need to file Form 8889, and claim the amount determined there on line 25 of Form 1040 when you file. You’ll have until the traditional April deadline to contribute to a prior tax year’s HSA.