IRS HSA Qualified Expenses 2022: What You Need to Know

The IRS has released guidance on qualified expenses for Health Savings Accounts (HSAs) in 2022, providing clarity on what expenses are eligible for reimbursement from an HSA. As the tax landscape continues to evolve, it's essential to stay informed about changes that may impact your HSA contributions and expenses.

Temporary COVID-19 Relief

The Taxpayer Certainty and Disaster Tax Relief Act of 2020 introduced temporary special rules for dependent care flexible spending arrangements (FSAs). These rules allow employers to amend their plans to permit unused amounts from previous years, such as 2020 and 2021, to be used in a subsequent year. This provision provides relief for individuals who had unused dependent care benefits due to the COVID-19 pandemic.

Maximum Amounts and Credits

For 2022, the maximum amount that can be excluded from an employee's income through a dependent care assistance program is $5,000 ($2,500 if married filing separately). The changes to dependent care benefits under the American Rescue Plan Act of 2021 have expired, but the 2021 enhancements remain in effect.

The credit for child and dependent care expenses is nonrefundable and can be claimed on qualifying employment-related expenses of up to $3,000 if you had one qualifying person or $6,000 if you had two or more qualifying persons. The maximum credit is 35% of your employment-related expenses.

Income Limits

Once your adjusted gross income exceeds $43,000, the maximum credit is 20% of your employment-related expenses. As your income increases, the percentage of employment-related expenses considered in determining the credit decreases.

Form 2441 and Instructions

For more information about the credit and qualified expenses, see Form 2441 and its instructions on IRS.gov/Form2441. The table under 'Amount of Credit' provides further details on the credit calculation.

IRS HSA qualified expenses for 2022 provide guidance on what expenses are eligible for reimbursement from an HSA. Understanding these changes can help you make informed decisions about your HSA contributions and expenses. By staying informed, you can maximize the benefits of your HSA and optimize your tax strategy.

Irs hsa qualified expenses 2022