MMC Benefits Handbook
Taxes
See the Participating in Spending Accounts section for more information about taxes.
Does the additional 20% tax apply to my Health Savings Account withdrawals for nonqualified medical expenses if I am disabled?
No. The 20% additional tax that generally applies if a withdrawal is not used for qualified medical expenses does not apply when you are disabled. However, the amount of the withdrawal will be included in your taxable income and subject to federal, state and local taxes as applicable. Please consult your personal tax advisor for specific advice regarding your personal circumstances.
Does the additional 20% tax apply to my Health Savings Account withdrawals for nonqualified medical expenses if I am age 65 or over?
No. The 20% additional tax that generally applies if a withdrawal is not used for qualified medical expenses does not apply when you are at least age 65. However, the amount of the withdrawal will be included in your taxable income and subject to federal, state and local taxes as applicable. Please consult your personal tax advisor for specific advice regarding your personal circumstances.
Can I deduct my before-tax contributions to my Health Savings Account on my tax return?
No, only after-tax contributions to the Health Savings Account may be deducted on your income tax return. You did not pay tax on the before-tax payroll contributions so you can not take a deduction for them. Please consult your personal tax advisor for specific advice regarding your personal circumstances.
Can I claim my expenses paid by the Health Savings Account as a deduction on my tax return?
No. If you receive tax-free withdrawals from the Health Savings Account, you cannot claim those expenses as a deduction on your federal income tax return. Please consult your personal tax advisor for specific advice regarding your personal circumstances.