HSA contribution for divorced non-custodial parent

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pevgeny
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Joined: Sun Aug 24, 2014 2:19 am

HSA contribution for divorced non-custodial parent

Post by pevgeny » Mon Oct 15, 2018 4:14 pm

Having hard time finding the answer on web resources/pubs.
My ex is having our child as dependent on his taxes.
I'd like to take the child under my insurance HDHP and increase the HSA contribution up to the max family limit for 2019 - 7k.
Can I do it, although ex will still claim the child as a dependent on his taxes, while my filing status is single?
TIA

GoldPressedLatinum
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Joined: Sat Aug 18, 2018 9:09 pm

Re: HSA contribution for divorced non-custodial parent

Post by GoldPressedLatinum » Mon Oct 15, 2018 5:36 pm

Yes. I am doing this exact same thing (in Ohio). Tax dependents and health insurance dependents are unrelated things.

pevgeny
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Joined: Sun Aug 24, 2014 2:19 am

Re: HSA contribution for divorced non-custodial parent

Post by pevgeny » Mon Oct 15, 2018 5:38 pm

GoldPressedLatinum wrote:
Mon Oct 15, 2018 5:36 pm
Yes. I am doing this exact same thing (in Ohio). Tax dependents and health insurance dependents are unrelated things.
Thank you, going to enroll tomorrow.Glad it is allowed.
Is it going to work for me till the kid is 18 y.o or till 26 y.o?

GoldPressedLatinum
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Joined: Sat Aug 18, 2018 9:09 pm

Re: HSA contribution for divorced non-custodial parent

Post by GoldPressedLatinum » Mon Oct 15, 2018 5:42 pm

Now that I'm doing some Google searching, I might be doing this wrong. I am not a lawyer, so do your own research.

Ex and I have an odd number of children, so we alternate who gets 2 and who gets 1 each year for tax purposes. But per our divorce agreement, I carry all 3 children on my health insurance. One of our children is over 18, so he files his own taxes (although mom helps him with the paperwork).

Spirit Rider
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Re: HSA contribution for divorced non-custodial parent

Post by Spirit Rider » Mon Oct 15, 2018 8:47 pm

You can cover your children regardless if they are your tax dependents until they are 26. Once they are no longer tax dependents, you can not use the HSA to pay for their unreimbursed qualified medical expenses. However, at that point they become HSA eligible individuals and may open an HSA and make contributions up to the full family contribution limit.

DIFAR31
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Re: HSA contribution for divorced non-custodial parent

Post by DIFAR31 » Mon Oct 15, 2018 9:12 pm

Spirit Rider wrote:
Mon Oct 15, 2018 8:47 pm
You can cover your children regardless if they are your tax dependents until they are 26. Once they are no longer tax dependents, you can not use the HSA to pay for their unreimbursed qualified medical expenses. However, at that point they become HSA eligible individuals and may open an HSA and make contributions up to the full family contribution limit.
I agree; I researched and came to the same conclusion.

pevgeny
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Joined: Sun Aug 24, 2014 2:19 am

Re: HSA contribution for divorced non-custodial parent

Post by pevgeny » Tue Oct 16, 2018 5:33 pm

:sharebeer TY

BogleMom
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Re: HSA contribution for divorced non-custodial parent

Post by BogleMom » Wed Oct 17, 2018 10:59 am

Spirit Rider wrote:
Mon Oct 15, 2018 8:47 pm
You can cover your children regardless if they are your tax dependents until they are 26. Once they are no longer tax dependents, you can not use the HSA to pay for their unreimbursed qualified medical expenses. However, at that point they become HSA eligible individuals and may open an HSA and make contributions up to the full family contribution limit.
While there are special rules for divorced parents, adult children must be dependents. A 22 year old college grad filing their own taxes and not claimed as a dependent, for example, while they can still be on their parents HDHP insurance, cannot use their parents HSA.

Edited due to reading too fast!
Last edited by BogleMom on Wed Oct 17, 2018 11:57 am, edited 1 time in total.

DIFAR31
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Re: HSA contribution for divorced non-custodial parent

Post by DIFAR31 » Wed Oct 17, 2018 11:33 am

BogleMom wrote:
Wed Oct 17, 2018 10:59 am
Spirit Rider wrote:
Mon Oct 15, 2018 8:47 pm
You can cover your children regardless if they are your tax dependents until they are 26. Once they are no longer tax dependents, you can not use the HSA to pay for their unreimbursed qualified medical expenses. However, at that point they become HSA eligible individuals and may open an HSA and make contributions up to the full family contribution limit.
While there are special rules for divorced parents, the above is not accurate. Adult children must be dependents. A 22 year old college grad filing their own taxes and not claimed as a dependent, for example, while they can still be on their parents HDHP insurance, cannot use their parents HSA.
I think that's exactly what Spirit Rider is saying.

MichCPA
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Re: HSA contribution for divorced non-custodial parent

Post by MichCPA » Wed Oct 17, 2018 11:44 am

BogleMom wrote:
Wed Oct 17, 2018 10:59 am
Spirit Rider wrote:
Mon Oct 15, 2018 8:47 pm
You can cover your children regardless if they are your tax dependents until they are 26. Once they are no longer tax dependents, you can not use the HSA to pay for their unreimbursed qualified medical expenses. However, at that point they become HSA eligible individuals and may open an HSA and make contributions up to the full family contribution limit.
While there are special rules for divorced parents, the above is not accurate. Adult children must be dependents. A 22 year old college grad filing their own taxes and not claimed as a dependent, for example, while they can still be on their parents HDHP insurance, cannot use their parents HSA.
Unless there is a 2018 tax change I am missing, filing a separate tax return wouldn't affect dependent status. Also, pub 969 contains the following language:
"For this purpose, a child of parents that are divorced, separated, or living apart for the last 6 months of the calendar year is treated as the dependent of both parents whether or not the custodial parent releases the claim to the child's exemption."

The 'this purpose' refers to qualifying medical expenses.

BogleMom
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Joined: Mon Dec 05, 2016 8:53 am

Re: HSA contribution for divorced non-custodial parent

Post by BogleMom » Wed Oct 17, 2018 11:58 am

DIFAR31 wrote:
Wed Oct 17, 2018 11:33 am
BogleMom wrote:
Wed Oct 17, 2018 10:59 am
Spirit Rider wrote:
Mon Oct 15, 2018 8:47 pm
You can cover your children regardless if they are your tax dependents until they are 26. Once they are no longer tax dependents, you can not use the HSA to pay for their unreimbursed qualified medical expenses. However, at that point they become HSA eligible individuals and may open an HSA and make contributions up to the full family contribution limit.
While there are special rules for divorced parents, the above is not accurate. Adult children must be dependents. A 22 year old college grad filing their own taxes and not claimed as a dependent, for example, while they can still be on their parents HDHP insurance, cannot use their parents HSA.
I think that's exactly what Spirit Rider is saying.

Ah, yes, I edited my post. We are essentially saying the same thing.

Trapper
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Joined: Sat Oct 04, 2014 8:38 am

Re: HSA contribution for divorced non-custodial parent

Post by Trapper » Wed Oct 17, 2018 1:43 pm

So, I am learning something new from this thread and now have a question.
My twenty something son completed four years of military service and is now attending college. He is no longer my dependent for taxes. I added him to my health insurance by changing from individual plan to a self plus one. I didn’t realize I couldn’t use the HSA to pay his out of pocket.

My question is that I am now contributing to my HSA as a family plan to the tune of about $7900, vs $4300 for an individual plan. I am ok there? I like filling the tax deductible space.

Spirit Rider
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Joined: Fri Mar 02, 2007 2:39 pm

Re: HSA contribution for divorced non-custodial parent

Post by Spirit Rider » Wed Oct 17, 2018 5:37 pm

Trapper wrote:
Wed Oct 17, 2018 1:43 pm
So, I am learning something new from this thread and now have a question.
My twenty something son completed four years of military service and is now attending college. He is no longer my dependent for taxes. I added him to my health insurance by changing from individual plan to a self plus one. I didn’t realize I couldn’t use the HSA to pay his out of pocket.

My question is that I am now contributing to my HSA as a family plan to the tune of about $7900, vs $4300 for an individual plan. I am ok there? I like filling the tax deductible space.
If you have an HSA qualifying family HDHP. You can contribute up to the maximum family HSA contribution limit. It is just that by not being a dependent, but covered under HSA qualifying family HDHP. Your son is also an HSA eligible individual and can contribute up to the maximum family HSA contribution limit. There is no limit coordination required as there would be for a spouse.

If you have taken distributions for his unreimbursed medical expenses with dates of service after he ceased being a dependent. Those were non-qualified distributions subject to a 20% penalty. If the HSA custodian allows, you may return the "mistaken" distribution to the HSA by the tax filing deadline and no penalty will apply. Unfortunately, if you made any such distributions in 2015 - 2017 or prior, you should amend your return and pay the 20% penalty.

Trapper
Posts: 155
Joined: Sat Oct 04, 2014 8:38 am

Re: HSA contribution for divorced non-custodial parent

Post by Trapper » Wed Oct 17, 2018 7:33 pm

Thank you Spirit Rider for your excellent explanation. We haven’t made any withdrawals, but am glad you outlined the path to take for those who may be reading.

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