Contributions
Distributions
Melting Pot
Tax Considerations
Scope
100
Who can contribute to an HSA?
An employer, employee, or another person on the employee's behalf.
100
When must the expense have been incurred in order to be a non-taxable distribution?
After the start date of the HSA.
Example: HSA start date is June 1, expenses for May don't qualify. (non-qualified purchases after the start date can't be offset by expenses before the start date)
100
What is a Health Savings Account (HSA)?
An HSA is a tax-exempt trust or custodial account set up with qualified HSA trustee.
100
Where do I enter HSA information in TaxSlayer?
HSA is found under the Adjustments in the Federal area.
100
I accidentally used my card to pay for a non-qualified medical expense. Can you do my return?
Yes, there is a tax penalty if the non-qualified distribution is not paid back by the return due date but it is in scope.
200
What are acceptable contributions?
Cash only, no stocks or property.
200
Can I double dip on my deduction?
NO, HSA funds can only be for unreimbursed expenses. Medical expenses paid for by HSA funds cannot be claimed on the Schedule A.
200
What is the difference between an HSA and a Flex Spending Account (FSA)?
An HSA is a portable account for those with a high-deductible health plan (HDHP).
A FSA is a non-portable, use it or lose it account funded with pre-tax dollars. There is no tax consequence or form associated with an FSA. In most cases, there may be a carryover allowance but usually limited in amount per year and time to use the carryover.
200
What if I accidentally contribute too much to my HSA?
Do not claim deduction for excess contribution
Withdraw excess contribution by due date of return
Withdraw and include on return
─Earnings on the excess such as interest
─Earnings reported as other income form 1040
Excess contributions incur additional 6% tax until
─Withdrawn or
─Used as qualified contribution in later year
Out of scope if additional tax applies
200
My husband died and made our son his HSA beneficiary. Can you do my return?
No, we won't be able to do the return. It would only be in scope if the spouse is the beneficiary.
300
What are the limits on contributions?
In 2018 HSA contribution limit
─$3,450 for self-only HDHP
─$6,900 for family HDHP
─Additional $1,000 if age 55 or older
Reduced by employer contributions
300
What tax form would report HSA distributions?
Form 1099 SA
300
Can married taxpayers each have their own HSA?
Yes
When both spouses are HSA eligible and
Each has self-only HDHP coverage
─Each can contribute $3,450
─Total contribution/deduction = $6,900 (self only limit $3,450 X 2)
OR
Either spouse has family HDHP coverage, both spouses treated as having family HDHP coverage
─Family contribution limit applies $6,900
─Split evenly unless agree upon different split
─Max contribution and deduction = $6,900
Applies to both self or family: 55 or older can contribute additional $1,000
300
What if I accidentally use my HSA card to pay for my weight loss pills?
This is an excess (nonqualified) distribution.
Excess distribution included as taxable income
─Form 8889 entry
•Other income Form 1040
Subject to 20% addition to tax
─Exceptions
•Death
•Disability
•After age 65
It can be paid back by the due date of the return to avoid the tax penalty.
300
Is an Archer Medical Savings account in scope?
NO, neither is a Medicare Advantage MSA
400
What form reports HSA contributions?
Form 5498 SA
400
Who can I spend my HSA funds on?
Myself, my spouse, and anyone I claim on my return as a dependent.
400
Can I switch my HSA trustee?
Yes,
HSA rollover and transfer rules similar to IRA
─Trustee-to-trustee transfers nontaxable and not considered rollover
─Only one rollover allowed during 12-month period
•Must be completed within 60 days
─Rollover and transfers not subject to contribution limits
400
Should I be keeping all of my receipts?
Yes, the taxpayer is responsible for recordkeeping and may need to prove distributions were qualified. Note, we can take the TP word but the IRS may audit/question?
400
Are distributions without contributions in scope?
Yes, all distributions are in scope.
500
When is the last day to get credit for 2018 HSA contributions?
April 15, 2019
500
What expenses can an HSA pay for?
Qualified medical expenses: those that are acceptable for Schedule A are acceptable for HSA as well as certain insurance premiums.
500
Who is eligible for an HSA?
Must be covered under high deductible health plan (HDHP) for self or family
─Insurer identifies qualified plans
Cannot be covered by other health insurance (with a few exceptions-see IRS info)
─Spouse eligible for other coverage if not HSA owner
Eligible individual cannot be a dependent of another taxpayer
500
What tax form are HSA contributions and distributions reported on?
Form 8889
500
I pulled money out of my IRA to max out my HSA contribution for the year. Can you do my return?
No, HSA funding distributions from an IRA are out of scope for us.
600
Quiz: Can my grandmother contribute $3000 to my HSA on March 1?
Yes, as long as total contributions for the year don't exceed the limit for my type of HSA (self or family)
600
Quiz: Can I pay for a nutrition class at the local hospital for my dependent parent with my self-only HSA?
Yes, as long as my parent is claimed on my tax return and the nutrition class is medically prescribed. Note that it does not cover costs for food or nutrition supplements.
600
Quiz: If my husband has an HSA for himself, can I have my own medical plan with an FSA?
Yes, as long as I'm not the owner, I can have a different medical plan and there is no tax consequence for an FSA.
600
Quiz: I accidentally contributed $300 over my HSA limit but scheduled a root canal with an approximate cost of $500 for March 1? Do I have to pay an extra tax?
Possibly, You can either withdraw the excess and avoid the tax (this keeps the return in scope) or you can apply the excess to a future year but it will incur a 6% excise tax which is out of scope.
600
Quiz: Is an excess contribution to an HSA always out of scope?
No, only if the funds are not withdrawn before the due date of the return.