Author Topic: HSA/Tax Questions  (Read 3934 times)

VioletVixen

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HSA/Tax Questions
« on: February 07, 2015, 06:44:33 PM »
Hi all,

This is my first year with an HSA and I am a little confused about what I can and can't deduct, and when.

1. On the 1099-SA, Turbo Tax wants me to list the distributions from my HSA. This does not have any affect on my taxes so long as I check the box that they were all used for qualified medical expenses, right? This part is only to track expenses that were NOT for qualified medical purchases so that they can tax me at this point, correct? These distributions were all made with my HSA debit card (I did not use my checking acct and then ask for reimbursement).

2. When you use the HSA debit card, will it let you buy ANYTHING, even if it's not a QME? Am I supposed to save ALL receipts for ALL medical purchases, even if I use this card? I had assumed the card's transaction history would keep track of that for me (and I have never tried to use it for any non-medical expenses).

3. I am not sure what to put in this form:

    Contributions from Box 12 on your W-2                            $0
   Employer contributions made in 2014 for tax year 2013              ?
   Employer contributions made in 2015 for tax year 2014              ?
   Other Employer Contributions not Reported on a W-2          $1000?
   All Other Contributions (i.e. contributions not made by your employer or with payroll deductions)   $480?


My W-2 only lists 12a: BB (my Roth 403b contributions) and 12b: DD (My employer's payments towards the entire health plan). I'm not sure what I am supposed to enter in the above form, but I do know that my employer contributed $1000 to my HSA for me, and I contributed $480, so is that right? I can't deduct the employer's contributions, but I can deduct mine, right? What are the other boxes for ("employer contributions made in 2014 for tax year 2013, employer contributions made in 2015 for tax year 2014")? When would I know to enter anything into those boxes, would it be listed specifically on my W-2?

3. If I DID buy something without my HSA debit card and have NOT asked for reimbursement yet (some prescriptions, an urgent clinic visit, etc.) do I list those on the Itemized Deduction Medical Expenses area? I assume that I can't list them there and then ALSO request reimbursement from the HSA later, as that is considered "double-dipping," correct? What is the best thing to do in this instance? Do you always ask for reimbursement, or do you itemize? I live in Oregon and last year my State taxes were best with the Itemized deductions, but my Federal was better off with the Standard deduction. The medical expenses I had itemized helped a lot on the State return. I guess I'm just confused about where and when to itemize, or choose reimbursement from the HSA, or if I can do both?

4. I see that some people on this forum never take money out of their HSAs and always pay medical expenses with other money (and save their receipts). Is that just to keep the HSA as an "emergency fund"? I'm confused about whether I should actually USE my HSA or just leave it alone...what is the best way to make the most of this account? Can you still be reimbursed from the HSA years later if you have the receipts?

5. I just opened my Traditional IRA with Vanguard. I've contributed $3000 so far for 2014, but I plan to top it off to $5500 before I file my taxes. Where do I enter this amount in order to decrease my taxable income? Do I just subtract that amount from my Total Income? Is it Line 32 on the 1040 form?


I think that's it for now. :)

a1smith

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Re: HSA/Tax Questions
« Reply #1 on: February 07, 2015, 07:50:11 PM »
Here are answers to the ones I'm sure of:

1. Yes.
2. The HSA credit card is a regular credit card, no checks are made to see if purchases are QME.
3(1st). I don't use TurboTax so not sure on this one.
3(2nd). You're right, you can't double dip.  Either get reimbursement from HSA or itemize as medical expense.  You can keep receipts for QME and request reimbursement for them anytime in the future; it does not have to happen in the same tax year.
4. Leaving money in HSA is to take maximum advantage of triple tax benefit.  Tax free contribution, tax free growth, and tax free withdrawals.  I do this as much as possible but have had to take some money out.  Already discussed above that you can claim QME anytime in the future.
5. Yes, the amount of your deductible IRA contribution shows up on line 32 and will decrease your AGI.  TurboTax should ask about IRA contributions and do all of the calculations for you (deductible vs non-deductible, etc.)

neil

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Re: HSA/Tax Questions
« Reply #2 on: February 07, 2015, 08:40:06 PM »
3. I am not sure what to put in this form:

    Contributions from Box 12 on your W-2                            $0
   Employer contributions made in 2014 for tax year 2013              ?
   Employer contributions made in 2015 for tax year 2014              ?
   Other Employer Contributions not Reported on a W-2          $1000?
   All Other Contributions (i.e. contributions not made by your employer or with payroll deductions)   $480?


My W-2 only lists 12a: BB (my Roth 403b contributions) and 12b: DD (My employer's payments towards the entire health plan). I'm not sure what I am supposed to enter in the above form, but I do know that my employer contributed $1000 to my HSA for me, and I contributed $480, so is that right? I can't deduct the employer's contributions, but I can deduct mine, right? What are the other boxes for ("employer contributions made in 2014 for tax year 2013, employer contributions made in 2015 for tax year 2014")? When would I know to enter anything into those boxes, would it be listed specifically on my W-2?


I will list out my experience with this since I just worked on this part.

On my W-2 in box 12 I have this entry

W - 3000

W is the code for employer contributions.  The $1000 your employer put in your HSA probably should be listed on your W-2 and it might be worth asking your payroll department about it before filing your taxes.  What you did looks correct if you do not have a code W on your W-2 but they provided a contribution.

I assume the $480 you put in "all other contributions" is money that you manually contributed to the HSA through a bank transfer or some other means (and not through your employer, who would have made W-2 adjustments to reflect the deduction already).  That looks correct if that is the case.

You should see a $480 deduction based on what you stated on form 8889.  Turbotax is asking about employer contributions as a check to make sure you did not go over the maximum - the $1000 offsets the maximum deduction you are allowed to take.

VioletVixen

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Re: HSA/Tax Questions
« Reply #3 on: February 07, 2015, 09:13:46 PM »
Thank you, a1smith!

neil, I do not have a "W" listed in box 12 of my W-2. I will ask my payroll department about it... the $480 I contributed was through payroll deduction, so I cannot claim that here?

And I also cannot itemize my health insurance premiums that were paid through payroll deduction because they were pre-tax, right? Basically, anything taken out by payroll deduction can't be claimed?

neil

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Re: HSA/Tax Questions
« Reply #4 on: February 07, 2015, 10:24:06 PM »
HSA payroll deductions through a cafeteria plan would have the deductions reflected on box 1/3/5 and you do not need to report this number manually on your taxes.  I believe this should be the common case, but it is possible an employer does not have a compliant plan and only does post-tax HSA contributions.  In this case, you can still get the tax deduction at tax time (which is what form 8889 is for) but you lose out on the FICA deduction which is the best part of doing contributions through your employer.

If payroll did not adjust your wages for your contributions, then box 12 code W would say $1000.  If they did, it needs to say $1480.  Since it is not listed, you probably need to have a chat with them.

I believe reporting code W is a requirement so they should have to send you an updated form.

The long way of checking (if payroll is not being helpful) would be comparing your gross income to box 1 after offsetting for any other pretax deductions.  My employer also clearly lists my HSA contributions as pretax on my paycheck.

VioletVixen

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Re: HSA/Tax Questions
« Reply #5 on: February 08, 2015, 11:26:20 AM »
neil,

Is a "cafeteria plan" just the term used for pre-tax payroll deduction of insurance premiums/HSA/etc? From what I can tell, boxes 1/3/5 WERE adjusted already for all of my benefit-related payroll deductions. But I should still have that box 12 "W" reporting $1480, right? I have no "W" at all, so I will speak with my payroll department.

So form 8889 is only necessary if I added money to my HSA outside of payroll deductions?

Thanks!