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For owners of S-Corporations understanding how to contribute to a Health Savings Account (HSA) can lead to significant tax advantages and healthcare savings. This post explores the rules and benefits of HSA contributions for S-Corporation shareholders.
HSAs are tax-advantaged savings accounts designed for individuals and families with high-deductible health plans (HDHPs). To qualify as an HDHP the plan must have a minimum deductible and max out of pocket to qualify. For 2023, the minimum deductible for self-only is $1,500 while the minimum for family coverage is $3,000. The maximum out-of-pocket expenses for self-only is $7,500 and family coverage is $15,000. If eligible you can make pre-tax contributions, earn tax-free growth, and make tax-free withdrawals for qualified medical expenses. It is important to note that to qualify for an HSA the coverage must be health insurance, cost sharing plans are not considered health insurance and are typically not HSA eligible.
HSA Contributions for >2% S-Corporation Shareholders:
Benefits of HSA Contributions:
While >2% shareholders of S-Corporations face unique rules for HSA contributions, understanding these nuances can unlock valuable tax savings and healthcare benefits. Careful planning and compliance with IRS guidelines are key to maximizing the advantages of an HSA.
If you’re an S-Corporation owner looking to optimize your HSA contributions, we would love to connect.
The tax information provided here is for informational purposes only and should not be construed as or relied upon for tax or legal advice. This information is based on the laws and regulations in effect at the time of issuance, and we do not undertake any obligation to update this information after the date of its release. Please speak with your tax professional or attorney for guidance specific to your circumstances.