HSA withdrawal in California

Forum|Forum|3 years ago
August 26, 2022
1 reply
9 views

Hi,

in California HSA contribution cannot be deducted as they are consider as any other type of investment.

if this is true, is it fair to say that if I withdraw money not for eligible medical expenses I will pay the same amount of taxes and the “only” difference is the 20% penalty?

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Best answer by Bsch4477

If you had interest or capital gains in the account in 2022 California will tax it whether you withdraw the money or not.

Bsch4477

Level 15

Withdrawals from your HSA not used for medical expenses are taxed federally at your usual tax rate and you will have a 20% penalty. California does not tax the withdrawal but will tax any interest or capital gain from your HSA account.

MicRedAuthor

Level 2

Understood but California will tax interests and capital gain even if I leave the money on my HSA. My point is… ate the end at December 31st I have my money in the HSA or I withdraw it I will be paying the same amount of tax on that money, the only difference is the 20% penalty