How are employee/individual contributions taxed?
Earnings on amounts in an HSA are not includable in gross income while held in the HSA (i.e., accruals are tax free) Salary reduction contributions are exempt from FICA and FUTA. Contributions made by a family member on behalf of an eligible individual to an HSA are deductible by the eligible individual in computing adjusted gross income. The contributions are deductible whether or not the eligible individual itemizes deductions. An individual who can be claimed as a dependent on another person’s tax return is not an eligible individual and may not deduct contributions to an HSA.
