Author Topic: Filing tax return prior to making 2014 HSA/IRA contributions?  (Read 5032 times)

charis

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Filing tax return prior to making 2014 HSA/IRA contributions?
« on: January 27, 2015, 08:28:15 AM »
I just opened an HSA in December after a job change and I won't hit my 2014 contribution limit of $6550 until mid-March.  Could I l file my 2014 tax return reflecting those contributions prior to making them?  Also, I haven't gotten my tax form from vanguard yet.  H and I will hit our 2014 IRA contribution limit at the end of the week.  I assume I have to wait for the tax form from vanguard before I can file my return anyway (half the contributions went into tIRAs and half into Roths)? Thanks.

Anomalous

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Re: Filing tax return prior to making 2014 HSA/IRA contributions?
« Reply #1 on: January 27, 2015, 02:19:23 PM »
I was looking up something similar for my own taxes a few days ago. Form 5498 (reports IRA contributions) and form 5498-SA (reports HSA contributions) don't have to be mailed out (to you or to the IRS) until May 31st, so normally you will not have received these forms when filing your taxes.

Based on this, my assumption is that as long as your actual contributions match up with what's reported on the 5498 at the end of May you would be OK. I'm not a tax professional though, and personally I finish up all my contributions before filing my taxes.

Runge

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Re: Filing tax return prior to making 2014 HSA/IRA contributions?
« Reply #2 on: January 27, 2015, 02:31:36 PM »
I don't know about HSA's but in regards to IRA's, to my knowledge, once you file your taxes, you can't contribute to last year's IRA at all. I guess you probably could, but if you get audited you'd get in trouble. Maybe I'm wrong, but that's my understanding.

Why don't you just wait to file until after you max out your contributions?

Angie55

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Re: Filing tax return prior to making 2014 HSA/IRA contributions?
« Reply #3 on: January 27, 2015, 02:33:11 PM »
Were you eligible for an HSA all of 2014 but neglected to open it until December? HSA contribution limits are not a set amount they are prorated based on time you were under a qualifying HDHP.

So if you only had an HDHP in Dec you would only be eligible to put in 1/12th of the maximum.

I was also under the assumption that you didn't have the 4 month leeway with HSA contributions. But never really looked into it. Guess I should since the company contribution comes in March. How do I know which year that contribution applies to? Always assumed it was the year you received it. Crap.

seattlecyclone

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Re: Filing tax return prior to making 2014 HSA/IRA contributions?
« Reply #4 on: January 27, 2015, 02:48:54 PM »
According to the IRS, you are allowed to contribute to an HSA until April 15 of the next calendar year. Also, there's a "last month rule" that allows you to make a full contribution for the year as long as you had a high-deductible health plan on December 1 and stay on that plan for the full next year.

As for the timing of your filing, I would personally just wait until I had made the contributions. When you sign your tax return you're promising that everything on there is true to the best of your knowledge, and you know full well that those contributions haven't been made. Intending to contribute is not the same as contributing. Just wait.

Numbers Man

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Re: Filing tax return prior to making 2014 HSA/IRA contributions?
« Reply #5 on: January 27, 2015, 02:53:49 PM »
I have filed my tax return before I made the HSA contribution and have lived to tell about it.

charis

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Re: Filing tax return prior to making 2014 HSA/IRA contributions?
« Reply #6 on: January 28, 2015, 07:47:12 AM »
According to the IRS, you are allowed to contribute to an HSA until April 15 of the next calendar year. Also, there's a "last month rule" that allows you to make a full contribution for the year as long as you had a high-deductible health plan on December 1 and stay on that plan for the full next year.

As for the timing of your filing, I would personally just wait until I had made the contributions. When you sign your tax return you're promising that everything on there is true to the best of your knowledge, and you know full well that those contributions haven't been made. Intending to contribute is not the same as contributing. Just wait.

There is a lot of misinformation here about HSAs, but the above is correct.

But also - when you sign your tax return, you are certifying that those contributions were made in the 2014 tax year.  If you did get audited, as long as those contributions were made, where is the issue?  My contributions are directly deposited from my paycheck pre-tax, so it is not left to chance.

charis

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Re: Filing tax return prior to making 2014 HSA/IRA contributions?
« Reply #7 on: January 28, 2015, 07:50:19 AM »
I was also under the assumption that you didn't have the 4 month leeway with HSA contributions. But never really looked into it. Guess I should since the company contribution comes in March. How do I know which year that contribution applies to? Always assumed it was the year you received it. Crap.

My HSA custodian applies the contribution to the year in which it was made.  I have to submit a form directing them to reallocate amounts contributed in Jan/Feb/Mar 2015 to the 2014 tax year.

seattlecyclone

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Re: Filing tax return prior to making 2014 HSA/IRA contributions?
« Reply #8 on: January 28, 2015, 11:34:38 AM »
But also - when you sign your tax return, you are certifying that those contributions were made in the 2014 tax year.  If you did get audited, as long as those contributions were made, where is the issue?  My contributions are directly deposited from my paycheck pre-tax, so it is not left to chance.

The law specifically allows you to make contributions in early 2015 that count for the 2014 tax year, so making contributions before April 15 is not an issue at all.

The issue is signing your name to a tax return stating you have made contributions when you have not actually made those contributions. The bottom of Form 1040 says "Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete." I'm not a lawyer, but it seems that there's a reasonable argument to be made that you are committing perjury (a felony) when you sign a tax return claiming contributions you haven't made.

That said, it seems exceedingly unlikely that you would be prosecuted or penalized in any way for doing this, as long as you do actually make the contributions by the deadline. If you can't make the contributions for whatever reason, you'll have to file an amended tax return, pay more tax, etc.

So I would ask: what's your big hurry? Why risk it? Why not just wait a month or two to file your tax return until you have actually made the contributions you plan to claim?

charis

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Re: Filing tax return prior to making 2014 HSA/IRA contributions?
« Reply #9 on: January 28, 2015, 02:03:51 PM »
As I said, you are certifying that the contributions are made in the 2014 tax year.  Not that they were made prior to the date you filed your 1040 tax form. 

Perjury is willfully subscribing as true any material matter which one does not believe to be true.  So, in this particular situation, no, a reasonable argument could not be made to support a perjury charge.

How does filing an amended tax return, in the worst case scenario, and paying more tax equate to being prosecuted/penalized for you?

The "hurry," although the why has nothing to do with the can, which was my question, is because the government owes me over $7K because my former employer withheld too much from a lump sum payout.  This money is going to pay off an high interest student loan.  I would rather not accrue 3 more months in interest if I can help it.

seattlecyclone

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Re: Filing tax return prior to making 2014 HSA/IRA contributions?
« Reply #10 on: January 28, 2015, 02:51:38 PM »
I still think it's a huge stretch to say your return is "true, correct, and complete" when you claim a deduction for performing an action that you have not actually performed yet. You clearly disagree. What we do agree on is that you're extremely unlikely to be prosecuted for doing it. Anyway, I've said all I have to say on this topic. Take whatever action feels right to you.

charis

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Re: Filing tax return prior to making 2014 HSA/IRA contributions?
« Reply #11 on: January 29, 2015, 07:24:54 AM »
I am still confused about how one would be prosecuted for filing an amended tax return. But thanks for the advice.

Numbers Man

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Re: Filing tax return prior to making 2014 HSA/IRA contributions?
« Reply #12 on: January 29, 2015, 08:58:26 AM »
Last year I filed my taxes electronically with the HSA deduction before I actually sent the check to the HSA Custodian. I received a deposit in my bank account from the IRS within a short period of time. After the IRS deposit, I sent a check to the HSA Custodian. Even if I didn't send the check to the HSA Custodian by April 15th I had the option of amending my return. I would then have to send a check to the IRS for the incremental taxes plus any small interest and/or penalties the IRS required. And of course, if I amended my return before the tax filing deadline I wouldn't owe any interest, etc. I just would have had to send a check for the difference.

No need to make a mountain out of a molehill.