The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Rollin on January 29, 2018, 06:41:35 AM
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Ah,FIRE! Now that I am such, I have very little earned income (at least that is what the IRS rules all it). However, I'm just a little confused on how this works relative to taxes for 2017 and my HSA. I have income from a side job. I also have expenses for the same side job. Do the expenses offset the income for purposes of calculating my "earned income" for the HSA contribution?
Example:
$1,000 income from business
$1,200 expenses for business
Was I allowed to contribute $1,000 to my HSA for 2017 in this scenario?
Second related question: I had money left over in the HSA from my pre-FIRE days. If I properly contribute in 2017 (add to what was the account balance starting the 2017 tax year) as noted in the first question, is there a limit to home much I can ask for reimbursement?
Example:
$4,000 balance from previous tax year (2016) was in HSA for starting 2017.
$1,000 added during 2017.
Was I allowed to ask for $5,000 in reimbursed medical expenses?
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Do the expenses offset the income for purposes of calculating my "earned income" for the HSA contribution?
You may be thinking of IRAs. There is no earned income test for HSA contributions. See 2016 Publication 969 - p969.pdf (https://www.irs.gov/pub/irs-pdf/p969.pdf).
Second related question: I had money left over in the HSA from my pre-FIRE days. If I properly contribute in 2017 (add to what was the account balance starting the 2017 tax year) as noted in the first question, is there a limit to home much I can ask for reimbursement?
Example:
$4,000 balance from previous tax year (2016) was in HSA for starting 2017.
$1,000 added during 2017.
Was I allowed to ask for $5,000 in reimbursed medical expenses?
If you have incurred $5000 in unreimbursed and undeducted medical expenses since opening your HSA, then yes.
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OMGs MDM I think you are correct in that I'm confusing that with IRA contributions! After reading the publication you linked it appears as though I can contribute up to $6,750, plus $1,000 because I am over 55.
Thank you!