HSA Questions

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Topic Author
guitarguy
Posts: 2191
Joined: Mon Dec 20, 2010 3:10 pm

HSA Questions

Post by guitarguy »

Probably easy elementary questions here regarding HSA contributions.

I make a contribution via payroll deduction normally. But...wife needs a root canal...$1k...and we yet have the funds in the HSA account to cover it.

From what I understand, I can contribute on my own (out of our savings account) to the HSA. My plan would be to pay the bill (cash discount), then contribute $1k into my HSA, then turn around and withdrawal that money to "reimburse myself" for the expense. Any problems with this plan?? Obviously I'd keep all receipts and stay under the annual max contribution limits.

Also regarding the tax deduction...how do they handle payroll deductions vs. personal contributions? Will I get a separate form that shows my personal contribution, and then my payroll deductions will be reflected on my W2? And itemizing isn't required to take the personal contribution deduction either, correct? Just want to make sure because we end up coming out very slightly ahead with standard deductions over itemizing.

Thanks for the help all. New to HSA as of 2014.

:sharebeer
jim_03
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Joined: Wed Aug 21, 2013 12:17 pm

Re: HSA Questions

Post by jim_03 »

Hi
I would not contribute from my personal savings account to HSA account to avoid any Tax hassles later on. I would actually pay cash(based on cash discount being offered) or use credit card(based on cash back from the credit card) and then when your payroll HSA contributions slowly accumulate in your HSA account then I would write a check for myself to reimburse the amount .
Topic Author
guitarguy
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Re: HSA Questions

Post by guitarguy »

jim_03 wrote:Hi
I would not contribute from my personal savings account to HSA account to avoid any Tax hassles later on.
What type of hassle would I risk getting into? As I understand it plain as day, contributions can be made by either method and either one is perfectly acceptable. I just wasn't sure how the actual paperwork is broken down.

We normally have rather low medical expenses so although we could stand to up our payroll contributions a bit, it would take a while to build a reserve and then withdrawal that money back.
livesoft
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Re: HSA Questions

Post by livesoft »

guitarguy wrote:Just want to make sure because we end up coming out very slightly ahead with standard deductions over itemizing.
This caught my eye. Such a situation calls for bunching of deductions into every other year, so one year you do the standard deduction and the next year you itemizing because you have doubled up deductions in that year.

See this post: http://www.bogleheads.org/forum/viewtop ... 7#p1863547
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livesoft
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Re: HSA Questions

Post by livesoft »

As for HSA, have your employer take $1,000 out of your next paycheck and put it in your HSA.

Then change rest of year paychecks to make sure you do not overcontribute for the year.

No need to put your own cash into HSA.
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N1CKV
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Re: HSA Questions

Post by N1CKV »

if you put your own money in to your HSA you will claim it when you file your taxes. You won't get the forms from your account holder until after you file (just as it is with IRA contributions), so keep track of this for yourself to report it properly.
linakin
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Re: HSA Questions

Post by linakin »

You also lose out on avoiding FICA taxes if you contribute yourself.
Spirit Rider
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Re: HSA Questions

Post by Spirit Rider »

livesoft wrote:
guitarguy wrote:Just want to make sure because we end up coming out very slightly ahead with standard deductions over itemizing.
This caught my eye. Such a situation calls for bunching of deductions into every other year, so one year you do the standard deduction and the next year you itemizing because you have doubled up deductions in that year.

See this post: http://www.bogleheads.org/forum/viewtop ... 7#p1863547
To respond to you and answer one of the OP's questions. HSA contributions are an either employer contributions or individual contributions. Both company contributions and employee contributions by payroll deduction are considered employer contributions reflected in your W2 box 12:W. Also, your deductions will adjust boxes 1, 3 (unless the SS max wage base is involved), and 5. Individual HSA contributions by deposit are adjustments to gross income (1040 L25) and are not itemized deductions.
livesoft
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Re: HSA Questions

Post by livesoft »

^Exactly, HSA contributions have nothing really to do with Schedule A and itemized deductions. Nevertheless, it appears to me that the OP can benefit from bunching deductions.
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Topic Author
guitarguy
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Re: HSA Questions

Post by guitarguy »

Thanks for the replies everyone.
livesoft wrote:
guitarguy wrote:Just want to make sure because we end up coming out very slightly ahead with standard deductions over itemizing.
This caught my eye. Such a situation calls for bunching of deductions into every other year, so one year you do the standard deduction and the next year you itemizing because you have doubled up deductions in that year.

See this post: http://www.bogleheads.org/forum/viewtop ... 7#p1863547
This is interesting. Our property taxes are around $2600 a year. We pay like $100 in the winter and $2500 in the summer. This is all done from our escrow account. Our charitable contributions are usually $200-400 per year. Our main drivers for itemizing are the taxes and our mortgage interest...which I can't really double up on. Plus we're crushing our mortgage right now too so our decreasing interest is pulling us further and further away from winning with itemizing. I'm not sure if there is still cause for me to look into this further? :confused

Regardless it's an interesting concept that I'll keep in mind for the future.

EDIT: I looked into changing my payroll contributions to HSA and I don't seem to see the option online. I'll have to contact my HR rep.

Should I be able to change HSA contribution amount anytime I want? i.e. change it to make a large contribution in Sept and then back to $200/m like we're doing now?
Last edited by guitarguy on Wed Aug 20, 2014 6:46 am, edited 1 time in total.
livesoft
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Re: HSA Questions

Post by livesoft »

One might be able to pay 13 months of mortgage in one year and 11 months in the next year. It's these small things that can make a difference of a few hundred dollars.
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