QUESTION:
Is there an advantage to setting up on HSA and contributing post tax dollars to it and deducting on my tax return? Versus simply tracking my medical expenses and deducting them without the HSA?

ANSWER:
There is a significant advantage to using a Health Savings Account (HSA), even if you contribute with post-tax dollars and then deduct those contributions on your tax return. Here’s why:

Benefits of Contributing to an HSA (Post-Tax and Deducting Later)

• Tax deduction: Contributions you make with post-tax dollars can be deducted on your tax return, lowering your taxable income.
• Tax-free growth: Any interest or investment earnings inside the HSA grow tax-free.
• Tax-free withdrawals: Funds used for qualified medical expenses can be withdrawn tax-free, giving you a “triple tax advantage.”
• No expiration: Unlike flexible spending accounts (FSAs), HSA funds roll over year to year and remain available indefinitely.
• Portability: The account belongs to you, not your employer. You keep it even if you change jobs or retire.

Comparing to Tracking Medical Expenses Without an HSA

• Medical expense deduction limits: To deduct medical expenses directly on your tax return, you can only deduct the portion that exceeds 7.5% of your adjusted gross income (AGI). For many taxpayers, this threshold is difficult to meet, meaning little or no deduction.
• No growth benefit: Simply tracking expenses doesn’t allow your money to grow tax-free in an account.
• Less flexibility: You only get a deduction in years when your medical expenses are high enough, whereas HSA contributions give you a deduction every year you contribute.

Using an HSA—even with post-tax contributions—generally provides more consistent and valuable tax advantages than relying on itemized medical expense deductions. The HSA gives you flexibility, long-term savings potential, and tax benefits that are not available if you only track and deduct medical expenses.

If you need guidance that is tailored specifically to your unique situation, we encourage you to connect directly with Pro Advisor Support. Their experienced team specializes in assisting clergy and church organizations with complex tax, payroll, bookkeeping, and HR matters. Whether you have detailed questions about compliance, deductions, or planning strategies, they can provide expert advice and walk you through the next steps with clarity and confidence.

Clergy Financial Resources
Tax I Payroll I Bookkeeping I HR | Consulting
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421.0101

Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421-0101
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com