April 15 is Approaching - Maximize Your HSA Contribution! Healthshare

April 15 is Approaching – Maximize Your HSA Contribution!

Tax-Refund

The 2014 tax deadline is swiftly approaching, which means it’s important that you maximize your HSA contributions, so that you can claim them on your 2014 tax return. The maximum HSA contribution limit in 2014 is $3,300 for individuals and $6,500 for families. In 2015, this contribution limit will increase to $3,350 for individuals and $6,650 for families.

Why Is It Important to Maximize Your Contributions?

Remember, funds that you deposit into your HSA account are exempt from federal income tax and are free for you to use for any qualified medical expense.

Therefore, any 2014 contribution that is put into your account by April 15 is considered an above-the-line tax deduction for your previous year’s taxes. This is a great benefit because you then receive a federal tax deduction even if you take the standard deduction and choose to not itemize your deductions. There are no restrictions on this tax deduction, including your source of income or the amount of income. A more comprehensive view of HSA-related tax savings can be seen on our Premium and Tax Savings page.

One important thing to keep in mind, is that while it’s suggested you maximize your contributions so you can receive tax benefits, you don’t want to overfund your HSA because you can then receive penalties. If you have found that you did contribute too much money, you are able to remove the excess funds and avoid penalties as long as you do so by April 15. Learn more here.

How to Report Your Health Insurance and HSA On Your Federal Tax Return

With the advent of Obamacare, U.S. taxpayers are now required to report their health insurance on their income tax return. This is where you’ll fill in that information:

  • If you are completing a Form 1040EZ, you will find the box to complete on line 11.
  • If you are completing a Form 1040A, the box can be found on line 38.
  • If you are completing a Form 1040, the box can be found on line 61.

To report your actual HSA contributions, you will need to use Form 8889. When completing form 8889, you need to report all contributions – both pre-tax and post-tax dollars. In Part 1 of Form 8889, you show these contributions for that particular tax year. Also, if your employer makes contributions to your HSA, they also need to be shown here.

You should expect to receive Form 5498-SA from your HSA Administrator which will show how much was contributed to your HSA for the year. Your W-2 will show how much your employer contributed, on box 12, code W.

Remember, the purpose of your Health Savings Account is to take advantage of your tax-free funds to pay for medical expenses. These funds can roll-over from year to year which is also an added benefit. Ultimately, maximizing the contributions allows you to save the most amount of money as possible during tax time.

Do you have more questions about your health savings account and how to maximize your contributions? Do you need more insight into how maximizing contributions will save you money at tax time?

Wiley Long

Wiley Long

Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.
Wiley Long

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