Spending HSA money not on Health. What will happen?
So I've been having money problems so I have pulled money out here and there from my HSA. In all total this year only about 361.00. The company I do my HSA with does not require recipes and they told me that's its between me and the IRS, so how will the IRS know? Is there a chance that they wont find out. If they do what is the penalty?
- ZarnevLv 71 decade agoFavorite Answer
The penalty is 10% plus normal taxes. Next year the penalty raises to 20%.
You are required to mention that you have the HSA on your taxes. You are also required to mention any withdrawals from the HSA and you are required to pay the penalty and taxes on the amount. If you don't file correctly the penalty is either jail or appointment as the Secretary of Treasury.Source(s): Independent Agent
- Spock (rhp)Lv 71 decade ago
IRS has three years from the due date of the return to discover this.
If the funds were deposited into the HSA without taxes having been paid first [the usual case], then the amount so taken is subject to income taxes, plus a penalty of 10% of the amount taken is added to your taxes due. I think "other income" on form 1040 is used for this.Source(s): retired businessman
- StephenWeinsteinLv 71 decade ago
There is not a "chance"; there is a certainty.
The company must the IRS how much you withdrew. That is how the IRS finds out how much you withdrew. There is no chance that the IRS will not find out the amount withdrawn.
You must tell the IRS how much you spent on health. If you do not tell the IRS how much you spent on health, then you must pay tax on the entire amount withdrawn, at whatever your income tax rate is, plus you must also pay a penalty of 10% of the amount withdrawn. Even if you do tell the IRS, the IRS may, if it wishes, ask you for receipts.
- Anonymous1 decade ago
What part of signing a return "under penalties of perjury" do you not get?
When caught lying, your last 3 years can be audited. If the error is more than 25% of your income, they can go back 6 years.
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- 1 decade ago
I know this one because I did it by mistake once. You will pay taxes on the amount. They can tell how it was spent - believe me.