Retirement tax questions

Hi @crimsondryad !

Thanks for this great question. I'd be happy to offer some hopefully good news!

Even though your daughter is not eligible to be your dependent due to her income, you may still be able to use your HSA on her qualified medical expenses. As long as you provided more than half of her financial support, you may use your HSA on her.

IRS Publication 969 attests to this. Reference page 9.

Per the IRS: 

"Qualified medical expenses are those incurred by the following persons.
1. You and your spouse.
2. All dependents you claim on your tax return.
3. Any person you could have claimed as a dependent on your return except that:
a. The person filed a joint return;

b. The person had gross income of $4,400 or more; or

c. You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2022 return."

As I stated above, if you provided more than half of your daughter's financial support, then the only reason you are not claiming your daughter as your dependent is because she possibly made over $4,400 in 2022 ($4,700 in 2023). Therefore, you would be eligible to use your HSA on her. Again, the key is whether or not you paid over half of her financial support.

I hope this information is helpful, @crimsondryad! I'll stay tuned in case you have a follow-up question. Thanks again!