(HSA) Health Savings Account Deduction A Health Savings Account Deduction is when an HSA Contribution can be deducted as an above the line deduction, off of one's adjusted gross income (AGI).  In 2008 an adult with individual HSA-Qualified High Deductible Health Insurance may contribute up to a maximum of $2900 into their Health Savings Account for the year.  With a family HSA Qualified High Deductible Insurance plan, the annual maximum HSA Contributions are $5800 in 2008.    Visit our page on the new 2009 changes in HSA contribution limits. Individuals age 55 and over may deposit into their account (and take a tax deduction on) an additional catch-up contribution of $900 in 2008.   There is no minimum deposit (it can be even $0), but what you deposit into your HSA account by April 15th is an "above the line" tax deduction for the previous year's income taxes.  This tax benefit is available to every adult, with no limitations or restrictions on the amount or source of one’s income.  These amounts may be contributed at one time in full or may be broken up into any desired installments throughout the entire year.  This Health Savings Account Deduction applies even if you do not itemize your Tax Deductions (and just take the standard deduction). HSA Contributions are not only tax deductible, but their earnings grow tax deferred.  It is best for the individual or family to contribute as much as possible up to the maximum each year, and as early as possible in the year since earlier contributions gives the money more time to accumulate these Tax Deferred Savings.  You would be surprised how much faster a Health Savings Account will grow if over 20 years, one makes the exact same contribution amounts in the first month instead of the six month of the year.  This illustrates the powerful relation of time and money.    Health Savings Account Deduction  (Top)   If you cancel your HSA qualified High Deductible Health Insurance before you've had the coverage for a full 12 months, your maximum contribution amount is pro-rated based on the number of months you had your coverage in force. A one-time rollover from your IRA (Individual Retirement Account), HRA (Health Reimbursement Arrangement) or FSA (Flexible Spending Account) into your Health Savings Account is allowed.  If your employer makes an HSA contribution for you, it is “excluded” from income, and not subject to any federal income tax or FICA taxes.  Either way, this will instantly reduce your federal income tax due for the year.  Most states also allow you to take a state income tax deduction for HSA contributions.  CRITICAL:  You must have your HSA-qualified health insurance in place by December 1st in order to qualify for a 2008 tax break.  Please apply as soon as possible. 2009 Contribution Limit Changes For 2009, the maximum annual HSA contribution for an eligible individual with self-only coverage is $3,000.  For family coverage, the maximum annual HSA contribution is $5,950. Catch up contribution for individual who are 55 or older is increased by statute to $1,000 for 2009 and all years going forward.  Read  more details here.   Health Savings Account Deduction (Top)                                                                                                                                                  31355 Oak Crest Drive Suite 250, Westlake Village, CA 91361