 Income tax 2023-2024, health savings account HSA deduction. Get ready and some coffee because we're looking to get the tax man off our back with income tax preparation 2023-2024. Most of this information comes from the instructions for Schedule 1 section of the Form 1040 instructions tax year 2023 as well as instructions for Form 8889 health savings accounts HSAs 2023 which you can find on the IRS website at irs.gov, irs.gov. Looking at the income tax formula, we're focused on line 2, adjustments to income. Remember in the first half of the income tax formula is in essence a funny income statement. Income statements typically having income minus expenses resulting in net income, here having income minus various deductions resulting in taxable income, deductions for taxes being good, therefore we're always looking to increase them if we can, noting the major differences in the categories of deductions, the adjustments to income or above the line deductions and the below the line deductions, standard or itemized deductions. One of those differences being that if you qualify for a above the line deduction or adjustment to income, you don't have to clear a hurdle such as the standard deduction before you get a benefit from those items. First page of the Form 1040, we're looking at line number 10, adjustments to income from Schedule 1. Here is the Schedule 1 part 2 which is the adjustments to income we're focused on line 13 which is the health savings account deduction and you can attach Form 8889. You can look at the instructions from Form 8889 for more detail as well. Alright line number 13, we have the health savings account. It's an HSA deduction. You may be able to take this deduction if contributions other than employer contributions, rollovers and qualified HAS funds distributions from an IRA were made to your HSA for 2023. There's more detail of course that can be found in Form 8889. That's the summary or line instruction. Let's go into a bit more of that detail. A health savings account, what is it? It's a tax advantaged medical savings account available to taxpayers in the United States who are enrolled in a high deductible health plan that's an HDHP. Now some of this terminology is a little bit wonky and can get first a word from our sponsor. Yeah, actually we're sponsoring ourselves on this one because apparently the merchandisers they don't want to be seen with us. But that's okay whatever because our merchandise is better than their stupid stuff anyways. Like our trust me I'm an accountant product line. It's paramount that you let people know that you're an accountant because apparently we're among the only ones equipped with the number crunching skills to answer society's current deep complex and nuanced questions. If you would like a commercial free experience consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com somewhat confusing and it kind of goes back to when they were trying to adjust everything during the Obama administration. You might remember that they had this big argument with the Obamacare and the kind of some of the details of it from my perspective was that they were trying to simplify the health care process and there's arguments in terms of how to better deal with that situation and the situation is going to be obviously the cost of health care is quite high and then the people that are able to get health care you want to make sure that everybody has the capacity to get health care. One of the arguments for why health care was high is because you have this free rider problem and that if people don't actually purchase health care then they still get they still do get health benefits because if they go to an emergency room or they have a problem they are going to typically be treated in which case that cost is basically taken on by the others that are paying for the premiums of the insurance which increases the insurance. So part of what they wanted to do is force everybody to have health insurance and if you don't buy health insurance then they were going to basically penalize you and then they also part of the plan seemed to be that they wanted to centralize the health care with less competition and what not and rather try to make everything more streamlined and similar in nature. Now some of that kind of went through and some of it did not and we ended up with some of this terminology with regards to the types of health plans and so now you've got this idea of a high deductible health plan. Now high deductible deductibles are typically the idea of what you have to pay when you actually get the benefit from when you pay for health care. So if I go and pay for health care of some kind do I have to pay for it or is there going to be is it just going to be covered by the insurance. So that's tied in with the deductible and the idea of a high deductible plan is usually with younger people that are healthy the idea would be you might want more of a high deductible plan because you don't plan on going to regular doctor visits and what not and because you're healthy and you don't have as much health problems and then when you do get go to the doctor you can pay the higher deductible but you'll have lower premiums is the general idea. So from that perspective it's not like the best plan it's not like the plan that you would get from the a rich person would probably have not have a high everything would be covered.