April 15 is Almost Here – Maximize Your HSA Contribution!

This year’s tax deadline is April 17th, which gives you some extra time to get your taxes together and maximize your HSA contribution — but not too much extra time. The maximum HSA contribution limit for 2017 is $3,400 for individuals and $6,750 for families. If you’re 55 or older, you can contribute an additional $1,000. 

To get the most out of the tax benefit, you’ll want to contribute up to the maximum limit. Any funds you deposit now count for the 2017 tax year and are completely exempt from federal income tax. Use your tax-free contributions for any qualified medical expense. 

Contribution limits for 2018 will increase to $3,450 for individuals and $6,900 for families, so now is the time to start planning ahead for next year as well.

HSA contributions are above-the-line tax deductions that reduce your taxable income dollar-for-dollar up the maximum allowable contribution limit, regardless of the source of income or your tax bracket. In fact, the higher your tax bracket is, the more you’re likely to save — and you’re paying yourself with every dollar you contribute to your HSA. The tax-free funds in your account are yours to use for any qualified medical expense.

How to Report Your HSA Contributions and Health Insurance on Your Tax Return

The affordable care act introduced reporting requirements for health insurance and HSA contributions.

To complete the health insurance reporting requirement on your tax return, you’ll just need to provide your health insurance information here:

• If you are using Form 1040EZ, fill in the box on line 11. 
• If you are using Form 1040A, fill in the box on line 38. 
• If you are using Form 1040, fill in the box on line 61. 

To report your HSA contributions for 2017, you’ll need to complete form 8889, including contributions made with both post-tax and pre-tax dollars as well as any contributions made to your HSA by your employer. 

Your HSA administrator sends you a copy of Form 5498-SA, which details your HSA contributions for the 2017 tax year. Your W-2 from your employer will show the amount your employer has contributed to your HSA. 

Tax-free funds you contribute to your HSA now can be rolled over from year to year, providing a welcomed tax break for 2017 and a well-funded Health Savings Account that you can use for any qualified medical expenses you may have in the future. 

If You Put Much In Your HSA, It’s Fixable

The IRS is a stickler about HSA contribution limits. If you’ve contributed more to your HSA than the maximum contribution limit, there’s a way to fix that so you can avoid penalties and fees.

Complete and return an “Excess Contribution Removal Form” to your HSA administrator. This form needs to be received by mail before the tax deadline for 2017, which is April 17th this year.

Any interest earned on the excess contributions will be taxable for 2017. However, this is usually a small amount and a small price to pay to avoid costly fees or penalties. The IRS imposes a 6 percent penalty — every year — on excess contributions that aren’t corrected before the tax deadline. If you’ve contributed too much to your HSA, you still have time to avoid the penalty.

Great News If You’re Considering an HSA

If you have a non-HSA plan with us, your current plan was the best option for your specific needs at the time you enrolled.

We have some great news for you. We now have a new HSA-qualified healthshare plan that has year-round enrollment, and that offers a huge savings when compared to most unsubsidized health plans available now. You can enroll at any time and begin taking advantage of HSA tax benefits while saving money on premiums.

Talk to your Personal Benefits Manager for more details.

Click here to schedule an appointment, or call 800-913-0172 to get started.    

To your health and wealth,

Wiley P. Long, III
President - HSA for America

The HSA for America Maximize Your HSA Newsletter is published monthly and emailed to subscribers at no charge. Subscribe now to stay on top of the critical information you need to know about health insurance, healthshare plans and managing your finances to achieve financial security.