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Tax Reminders Concerning your HSA

March 06, 2019

Growing Your Wealth


As you prepare your 2018 tax return, here are some important tax-related reminders.

  • If you want to make a 2018 contribution to your HSA, don’t worry there is still time.  Contributions into the HSA for the 2018 tax year can be made until April 15, 2019.  To ensure your contribution is coded to the correct tax year, please notify the HSA administrator if the contribution is for the prior year.
  • Funding an HSA each year is a no brainer. Even if the HSA owner plans to spend every penny on medical expenses immediately after funding the account, they still receive the tax benefit. Taking the step to contribute to an HSA first and then paying the expense means the participant will not pay income taxes on those dollars.
  • Health Benefit Solutions has already distributed 1099-SA to participants.  As a reminder, the 1099-SA form reports the total amount distributed from the HSA account during the tax year.  This form is provided to the participant as well as the IRS.
  • Health Benefit Solutions sends the 5498-SA tax form to participants in May. This tax form reports total contributions into an HSA for the year, including any contribution made prior to April 15, 2019, for the 2018 tax year. If documentation is needed earlier, they can pull their 2018 contributions online or contact HBS for assistance. This form is also provided to the participant as well as the IRS.
  • Don’t pay an excess tax charge! Each year the IRS sets the maximum contribution limit; if an HSA owner contributes over the limit, a 6% excess tax is charged on the overage each year until it is corrected. At times the contribution amount above the limit is accidental, such as when a merchant sends funds back electronically and does not code as a return, but a contribution. Although Health Benefit Solutions has built in regulatory requirements in our system to help catch these situations, not all benefit administrators do. 

HSA owners are responsible for keeping documentation for any distributions.  If audited, the individual will need to prove funds were used for a qualified expense to avoid taxes and the 20% penalty.

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This blog article is for informational purposes only, and is not an advertisement for a product or service. The accuracy and completeness is not guaranteed and does not constitute legal or tax advice. Please consult with your own tax, legal, and financial advisors.