How HSAs help employees realize better 2020 tax breaks – and what to know for 2021

HSAs offer a solid cushion when employees need to withdraw money to handle unplanned medical expenses or healthcare costs without any penalties. (Photo: Shutterstock)

If you asked someone what their favorite season is, you’d be hard pressed to find someone that responds with, “tax season!” It’s the time of year that’s dreaded by many but there are several steps you can take to turn your least favorite season into ‘money-saving season.’ Understanding your tax-advantaged accounts is the first step in realizing better tax breaks this year – especially because the deadline has been extended to July 15th – as well as help you prepare for 2021.

One such tax-advantaged account is a health savings account (HSAs). HSAs are available to any taxpayer in the U.S. enrolled in a high-deductible health plan and allow individuals to contribute and withdraw funds tax free, as long as they’re used to pay for qualified medical expenses. In addition, the money is not lost at the end of the year; funds can be rolled over and allowed to grow if they are not spent.