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HSA tax center

Questions about how to save on taxes?

At Optum Financial we want to make sure you make the most of your HSA and that includes understanding all of the tax benefits.

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Looking for your bank or tax statements? Sign in to your account online and select View statements from the I want to... drop down menu.

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Questions about your taxes? We're here to help.

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Q. What is the HSA contribution deadline?

A. You have until the tax filing deadline (typically April 15) to make contributions to your HSA for the previous year. This means that for the 2021 tax season, you can contribute up to the annual maximum contribution limit until April 15, 2022.

Click here for more information on the annual contribution limits.

Q. How do I obtain a copy of my tax forms?

A. Sign in to your account online and select View statements from the I want to... drop down menu.

Q. How do I save on taxes with an HSA?

A. The money you contribute to your HSA is tax-deductible up to the annual contribution limit. For example, if you are in the 28 percent tax bracket and deposit $3,000 into your HSA, you could save $840 in federal income taxes. Money you take out of your HSA to pay for qualified medical expenses is tax-free. Interest you may earn on your HSA grows income tax free.

Q. Which forms do I need to file my taxes?

A. There are three tax forms associated with health savings accounts (HSAs): IRS Form 1099-SA, 5498-SA and IRS Form 8889.

Please use the information in your 1099-SA form, available online, to fill out IRS tax form 8889. Form 8889 is the only one you need to submit with your taxes. You can find IRS tax form 8889 in the “Statements & Docs” section after signing in to your account.

  • IRS form 1099-SA shows the amount of money you spent from your HSA during the tax year.
  • IRS form 5498-SA shows the amount of money deposited into your HSA for the tax year.
  • IRS form 8889 is the form you fill out and submit with your tax return.
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Q. When will I get my tax forms?

A. IRS Form 1099-SA is typically available at the end of January. It will be posted to your account and mailed, if elected. IRS Form 8889 can be downloaded from IRS.gov at any time.

IRS Form 5498-SA is typically available around the end of January. If you contribute in the new year for the previous tax year, you will also get another 5498-SA form in May.

Q. Why doesn’t my W-2 match the Form 5498-SA?

A. If the contributions on your W-2 don’t match your Form 5498-SA, you likely made after-tax contributions or contributions between January 1 and tax day for the previous tax year.

Q. What do I need to report to the IRS?

A. In addition to the forms noted above, keep track of your spending in case you have to prove you used funds for qualified medical expenses. It’s up to you to keep track of your expenses and report any funds you use for nonqualified medical expenses.

 

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Q. What about nonqualified expenses?

A: It’s up to you to maintain records to verify that funds were used for qualified medical expenses. Funds used for nonqualified expenses will be taxed as income and subject to a 20 percent penalty. If you mistakenly use your HSA for a nonqualified expense, you can return the funds to your HSA to avoid the penalty. Sign in to your account and download the Withdrawal Correction Form. Optum Financial must receive it by the tax filing deadline. 

If you are 65 or older or enrolled in Medicare, you can use your HSA for nonmedical expenses without incurring a tax penalty. Those distributions will be treated like retirement income and will be subject to normal income tax.

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Q. What happens if I contribute too much?

A. If you contribute more than the allowable amount, you will have to count the extra amount as taxable income, and the IRS may have you pay a 6 percent excise tax on the excess contributions. This tax applies to each tax year the excess contribution remains in the account.

If you do make excess contributions, you can prevent being penalized by completing an Excess Contribution and Deposit Correction Request Form to have excess funds returned to you. This and other account forms are available after you sign in.

Q. Where can I find my state tax information?

A. Each state can decide to follow the federal tax guidelines for HSAs or establish its own. Please consult a tax advisor regarding your state’s rules or visit your state’s Department of Revenue office for more information.

While health savings accounts (HSAs) were created by the federal government, states can choose to follow the federal tax treatment guidelines or establish their own.

Eligible HSA contributions are not taxed by these states:

Alabama
Arizona
Arkansas
Colorado
Connecticut
Delaware
Georgia
Hawaii
Idaho
Illinois
Indiana

Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi

Missouri
Montana
Nebraska
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon

Pennsylvania
Rhode Island
South Carolina
Utah
Virginia
Vermont
West Virginia
Wisconsin

Eligible HSA contributions are taxed by these states:
Consult your financial advisor or state department of revenue for more information.

California

New Jersey

   

States without state income taxes – eligible HSA contributions are not taxed:

Alaska
Florida
New Hampshire

Nevada
South Dakota

Tennessee 
Texas

Washington
Wyoming

HSA earnings (but not eligible contributions) are taxed by these states:
Consult your financial advisor or state department of revenue for more information

New Hampshire

Tennessee

 

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Health savings accounts (HSAs) are offered or administered by Optum Bank®, Member FDIC, or ConnectYourCare, LLC, each a subsidiary of Optum Financial. HSAs are subject to eligibility requirements and restrictions on deposits and withdrawals to avoid IRS penalties. State taxes may apply. Fees may reduce earnings on account. Flexible spending accounts/arrangements (FSAs), health reimbursement arrangements (HRAs), Commuter and Parking Benefits, Adoption Reimbursement Plans, Tuitions Reimbursement Plans, Surrogacy Reimbursement Plans, Lifestyle Plans, COBRA Benefits, and all other account types are administered on behalf of your plan sponsor by Optum Financial, Inc. or ConnectYourCare, LLC (collectively, “Optum Financial”) and are subject to eligibility and restrictions. Please contact a legal or tax professional for advice on eligibility, tax treatment, and restrictions. Please contact your plan administrator with questions about enrollment or plan restrictions. Federal and state laws and regulations and the design of your plan are subject to change.

Self-directed mutual fund investment options are made available through the services of an independent investment advisor, or your plan sponsor. Discretionary advisory services are provided by Betterment LLC, an SEC-registered investment adviser, with associated brokerage transactions provided by Betterment Securities, member FINRA/SIPC. For details and disclosures visit betterment.com. Certain brokerage services are offered through TD Ameritrade, Inc., member FDIC/SIPC and a subsidiary of The Charles Schwab Corporation.  For details and disclosures, visit  www.tdameritrade.com. The Schwab Health Savings Brokerage Account is offered through Charles Schwab & Co., Inc., member FINRA/SIPC. For details and disclosures, visit schwab.com.

Orders are accepted to effect transactions in securities only as an accommodation to HSA owners. Optum Financial and its subsidiaries are not broker-dealers or registered investment advisors and do not provide investment advice or research concerning securities, make recommendations concerning securities, or otherwise solicit securities transactions.

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