Q: Last year was my aboriginal with a high-deductible bloom plan accumulated with a bloom accumulation annual at work. What do I charge to address apropos the HSA back I book my taxes?
A: Back you file, you’ll charge to accommodate Anatomy 8889 to address all contributions and withdrawals associated with your bloom accumulation annual in 2013. The anatomy has a band for advertisement your absolute contributions to your HSA, and you’ll backpack that answer to band 25 of your Anatomy 1040.
The anatomy additionally has a band to address employer contributions, which you’ll ample in if you fabricated pretax contributions via bulk deduction, or if your aggregation contributed to your account. This can be confusing, addendum Roy Ramthun, architect of HSA Consulting Services, because the IRS considers both of these to be employer pay-ins. You’ll acquisition the actual bulk on your W-2 anatomy (box 12, cipher W).
You should additionally accept accustomed a Anatomy 1099-SA from your HSA ambassador advertisement withdrawals from the account. You charge to address those distributions on Anatomy 8889 and announce which were for acceptable medical costs and which were not.
Ineligible payouts are taxable, and you charge to address them on band 21 of Anatomy 1040. (HSA money aloof for nonmedical purposes is additionally accountable to a 20 percent amends if you’re adolescent than age 65; that amends is affected on Anatomy 8889 and agitated over to band 60 of Anatomy 1040.) See the instructions for Anatomy 8889 for details. Additionally see IRS Publication 969, “Health Accumulation Accounts and Added Tax-Favored Bloom Plans.”
Withdrawals for acceptable medical costs are tax-free at any age. Unlike with adjustable spending accounts, however, your HSA ambassador isn’t answerable to verify whether withdrawals are for acceptable expenses.
“All your HSA babysitter knows is that it was a withdrawal, but you accept to be able to appearance whether it was able or not,” says Jeff Munn, vice-president of annual action development for Fidelity Investments, which administers HSAs for abounding employers. So accumulate receipts for able medical costs — deductibles, co-payments and unreimbursed costs such as dental visits and eyes affliction — in case you’re audited (but don’t abide the receipts back you book your taxes).
An absorbing aberration of bloom accumulation accounts is that you may abjure the money for acceptable medical costs at any time; there’s no borderline for application the money. For example, some bodies accept to pay for their deductibles, co-pays and abroad medical costs from added accumulation so that they can accumulate added money growing in the HSA tax-free.
But if you charge to admission some added banknote in an emergency, you can abjure the money from the HSA at any time, as continued as you accept annal assuming that the costs were incurred afterwards the date you opened the account.
“Once you accessible the account, for any able medical amount you accept afterwards that point, whether it’s bristles years or 30 years later, you can balance yourself from the HSA and do it tax-free,” says Munn. For tax purposes, you charge to address the year you fabricated the withdrawal.
For added advice about bloom accumulation accounts, see Smart Strategies for Bloom Accumulation Accounts. Additionally see FAQs about Bloom Accumulation Accounts.
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