How to enter Health Savings Accounts (HSAs) and Qualified Charitable Distributions (QCDs)

hello income lab I wanted to walk you

0:04

through some new features

0:06

um so this is a very simple household

0:08

single individual age 65 today

0:12

um

0:13

and he has an IRA

0:16

and also a um

0:19

a health savings account

0:22

um

0:24

the health savings account is just a new

0:26

a new account type so it's it's

0:30

available on this list of ever growing

0:33

list of account types

0:35

you can uh set it to be used even

0:39

pre-retirement if there's a

0:40

pre-retirement period by default it

0:43

won't be so the default is that someone

0:45

is kind of saving their HSA for

0:47

retirement to be used against medical

0:50

expenses

0:52

um in that time period so and that would

0:54

be for qualified distribution so the

0:56

tax-free distributions if the HSA were

1:00

kind of the only thing left and it were

1:02

after age 65

1:05

um then then the software would actually

1:07

access that for other purposes as well

1:09

but if there are plans for medical

1:12

expenses then then it's gonna it's gonna

1:16

hold on to the HSA and use it for those

1:18

so you can see the HSA expenses start

1:20

next year so let's just step forward

1:24

okay and this next year

1:26

um you can see we've got a little over

1:29

five thousand dollars in uh

1:31

in medical expenses and we're using the

1:34

HSA to hit those we're using the IRA for

1:36

everything else

1:38

um

1:38

so that's uh that's a very cool little

1:41

new feature

1:43

um I'll walk you through that the tax

1:44

side of it as well in a second just so

1:46

you can see

1:48

um that the tax free

1:51

um that those are tax-free withdrawals

1:52

you'll also notice that I have some

1:54

charitable expenses here so

1:57

um it's about 2400 bucks a year

2:00

we also have now support for qcds so

2:05

qualified charitable distributions which

2:08

can come from any Ira so crucially not

2:12

from 401ks and things but if you've got

2:14

an IRA a simple a sap or even an

2:17

inherited IRA

2:18

you'll be able to fund those expenses

2:22

um

2:22

what you have to do is create an expense

2:25

could be a baseline or an other variable

2:27

expense and set it as as Charity or check the box to makr it as “Expense is tax-deductible” so

2:30

anything that has been marked as Expense is tax-deductible we are assuming

2:32

is qcd eligible. 

2:38

um and for anything set to

2:40

Medical we're assuming is HSA qualified

2:42

so again don't set it to Medical if you

2:45

don't want an HSA to to fund those

2:49

um now qualified charitable

2:51

distributions you'll only be able to hit

2:53

once you turn 70 and a half and it's

2:56

literally the month you turn 70 and a

2:57

half it's not the year so

2:59

um let's go to the tax Center

3:03

and have a look

3:05

so you'll see these exposed in the

3:08

explore section

3:11

um

3:12

and there's a new kind of

3:13

all-encompassing

3:15

um category non-taxable qualified

3:18

distributions so that's going to be

3:20

anything from a qualified plan or IRA

3:23

that's not taxed including Roth

3:24

distributions we're working on some some

3:27

further kind of breakouts of this

3:30

um in life Hub but we already have a lot

3:34

of categories here so rather than

3:36

overwhelm you with new ones we kind of

3:38

stick it all together so in 2023 when

3:41

the medical

3:42

expenses start we can see we start

3:45

getting distributions that are tax-free

3:48

or non-taxable but you'll notice it's

3:51

only the five thousand it's not the

3:53

other 2400 in in charity and that's

3:56

because this person is not yet

3:58

um 70 and a half so

4:01

I think if we go to 2027 as the first

4:04

year we'll see that yeah so in 2027 uh

4:07

now this plan has 2400 a year but we're

4:10

not getting the full amount because they

4:11

didn't turn 70 and a half until part way

4:14

through the year so you actually have to

4:15

go to the next year when they're uh when

4:18

they've been 70 and a half the whole

4:19

year and now we see the full 2400 coming

4:22

that's non-taxable so two

4:26

um new features that I know a lot of

4:28

people have been asking for qualified

4:30

charitable distributions and support for

4:33

health savings accounts I'm excited to

4:36

have them enjoy