HSA Contribution to lower MAGI

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Dilbydog
Posts: 99
Joined: Mon May 23, 2016 10:17 pm

HSA Contribution to lower MAGI

Post by Dilbydog »

So, I received a small unexpected end of the year bonus that pushes my MAGI into reduced contribution for my Roth IRA. I've already maxed out my 401k for the year so my only other option is to max out my unused HSA space, approx $4k, to drop my MAGI below the threshold. I've already fully funded my Roth for the year and really don't want to do a recharacterazation back to a TIRA and then backdoor to the Roth.
I have one more payroll check due to me for the year, and I would like to tell payroll to apply the entire check to my HSA. However, I am unsure that they can apply the entire amount, (no fed, no medicare) to the HSA. Does anyone know if I can sneak the entirety of my last check into my HSA?

Thank you,
DSInvestor
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Joined: Sat Oct 04, 2008 11:42 am

Re: HSA Contribution to lower MAGI

Post by DSInvestor »

If you can't max out your HSA by payroll deduction in time, you may be able to contribute to it by writing a check by tax filing deadline. I believe HSA contributions done by payroll deduction are before social security/medicare. Contributions to HSA made other ways will not reduce your social security and medicare payroll taxes.

If you have investments in taxable accounts that have a capital loss, you can realize those capital losses before DEC 31 so they can be counted by your 2016 tax return. Assuming you have a net capital loss, up to 3K of capital loss can be used to reduce your AGI. The remaining capital loss is then carried forward to next tax year.
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Dilbydog
Posts: 99
Joined: Mon May 23, 2016 10:17 pm

Re: HSA Contribution to lower MAGI

Post by Dilbydog »

I didn't know capital loss could be counted against your MAGI, I'll have to look into that.
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whodidntante
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Re: HSA Contribution to lower MAGI

Post by whodidntante »

So you had a HDHP and did not max the HSA? I recommend you max it next year. The ability to withdraw current of future medical expenses tax free makes it incredibly powerful.

If you make enough that Roth MAGI is an issue, you've already crossed the limit where social security (but not medicare) tax maxes out. At least that is true for my tax situation.
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