New Child Health Savings Accounts: Tax Benefits for Parents
This act introduces the option to create special health savings accounts for children. Parents can contribute money to these accounts and deduct it from their taxes, potentially reducing their tax burden. Funds from the account can be used for the child's medical expenses, and the account transfers to the child's ownership upon reaching age 18.
Key points
Parents can establish health savings accounts for their children.
Contributions to these accounts, up to $3,000 annually per child, will be tax-deductible.
Funds from the account can be used for qualified medical expenses of the child.
The account becomes the child's property after they turn 18.
Withdrawals from the account before the child turns 18, not used for medical expenses, will be taxed as the parents' income.
In case of a child's death or disability, parents can roll over funds to other savings or retirement accounts.
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