Dear Liz: I need some help understanding health savings account distribution rules. I was injured and bought medical supplies with my credit card, then reimbursed myself from my HSA. When I didn’t need the supplies, I returned them for a refund. What now? It seems like the money should go back to the HSA, but it’s not clear how to do that. Are there tax implications for a non-qualified HSA withdrawal made in good faith?
Answer: You typically have until April 15 of the following year to return funds mistakenly withdrawn from a health savings account. Otherwise, the withdrawal would incur income taxes and a 20% federal penalty.
Mistakes aren’t uncommon. Contact your HSA custodian, which likely has a procedure to get the money back into your account.
Leave a Comment