Question

Casey turned age 65 May 29, 2018. During the year, she received distributions from her HSA account totaling $728.96. She paid 369.09 for electrolytes om March 3. She paid $44.87 to her ENT doctor on June 4 and $315. to her chiropractorin July and August. The penalty on Casey's non-qualified distributions is what?

Answer 1

Any distributions made from Health Saving Account (HSA) for non medical expenses, the amount withdrawn will be subject to both income tax and an additional 20% tax penalty.

However individuals who are 65 years old or older will no longer be able to contribute to an HSA but can withdraw any funds accumulated in the account for any expense without incurring the 20% penalty. However, income tax will still apply to any non-medical usage.

Since Carey have turned to age of 65 or more the non-qualifying distribution will not be subject to any penalty.

Further during the year all amount withdrawan is toward qualifying medical expenses hence nothing will be taxable :

Electrolytes - Over the counter medicine	369.09
Fees for ENT Doctor	44.87
For chiropractorin treatment	315.00
Total Qualifying medical expense	728.96