The U.S. Health Savings accounts allow for a withdrawal for any purpose, but when used for something else than approved medical expenses, the withdrawal is subjected to taxes and a 20% penalty.

Another feature of the HSA is that, until the official tax deadline, you can make a contribution for previous tax year. For example, if a person in February 2023 finds out that they have taxes due when filling their previous tax return, they can make a payment for 2022 to their HSA to reduce the taxes due for 2022.

Question: Are there any potential negative consequences, besides the taxes and the penalty, from making a withdrawal from the HSA in say February of some year and then using that money to submit a contribution for the previous tax year?

  • Why would you do that? Just to defer the tax a year?
    – D Stanley
    Mar 13, 2023 at 16:33
  • @DStanley, exactly
    – neo
    Mar 13, 2023 at 16:39
  • 1
    Sounds like you're willing to pay 20% penalty to defer taxes from one year to another - what's the point in that?
    – littleadv
    Mar 13, 2023 at 16:50
  • 1
    Have you contributed to the HSA before? If so, can you find enough medical expenses between then and now to count this as a medical withdrawal?
    – user102008
    Mar 13, 2023 at 17:09

1 Answer 1


I can think of better ways to reduce taxes - why not just contribute cash and reduce your HSA contributions for this year? Or just contribute cash and change nothing?

Paying a 20% penalty to defer taxes one year seems like a waste.

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