Question

After enrolling in Medicare and purchasing a supplement, Rachel withdrew $2,000 from her HSA. She used $600 to pay her Medicare Supplement premium, $200 for out-of- pocket medical expenses, and the remaining $1,200 on a trip to celebrate her retirement. When preparing her taxes for the year, she discovered that: A $2000 was subject to income tax and a 20% penalty B $1,200 was subject to income tax C $1,200 was subject to income tax plus a 20% penalty D The entire amount was tax free

Answer 1

Answer:

$1,200 was subject to income tax is the correct answer.

Explanation: