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Turbotax 2009

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Turbotax 2009

Turbotax 2009 Publication 969 - Main Content Table of Contents Health Savings Accounts (HSAs)Qualifying for an HSA Contributions to an HSA Distributions From an HSA Balance in an HSA Death of HSA Holder Filing Form 8889 Employer Participation Medical Savings Accounts (MSAs)Archer MSAs Contributions to an MSA Distributions From an MSA Balance in an Archer MSA Death of the Archer MSA Holder Filing Form 8853 Employer Participation Medicare Advantage MSAs Flexible Spending Arrangements (FSAs)Qualifying for an FSA Contributions to an FSA Distributions From an FSA Balance in an FSA Employer Participation Health Reimbursement Arrangements (HRAs)Qualifying for an HRA Contributions to an HRA Distributions From an HRA Balance in an HRA Employer Participation How To Get Tax HelpLow Income Taxpayer Clinics Health Savings Accounts (HSAs) A health savings account (HSA) is a tax-exempt trust or custodial account you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. Turbotax 2009 You must be an eligible individual to qualify for an HSA. Turbotax 2009 No permission or authorization from the IRS is necessary to establish an HSA. Turbotax 2009 You set up an HSA with a trustee. Turbotax 2009 A qualified HSA trustee can be a bank, an insurance company, or anyone already approved by the IRS to be a trustee of individual retirement arrangements (IRAs) or Archer MSAs. Turbotax 2009 The HSA can be established through a trustee that is different from your health plan provider. Turbotax 2009 Your employer may already have some information on HSA trustees in your area. Turbotax 2009 If you have an Archer MSA, you can generally roll it over into an HSA tax free. Turbotax 2009 See Rollovers, later. Turbotax 2009 What are the benefits of an HSA?   You may enjoy several benefits from having an HSA. Turbotax 2009 You can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you do not itemize your deductions on Form 1040. Turbotax 2009 Contributions to your HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income. Turbotax 2009 The contributions remain in your account until you use them. Turbotax 2009 The interest or other earnings on the assets in the account are tax free. Turbotax 2009 Distributions may be tax free if you pay qualified medical expenses. Turbotax 2009 See Qualified medical expenses , later. Turbotax 2009 An HSA is “portable. Turbotax 2009 ” It stays with you if you change employers or leave the work force. Turbotax 2009 Qualifying for an HSA To be an eligible individual and qualify for an HSA, you must meet the following requirements. Turbotax 2009 You must be covered under a high deductible health plan (HDHP), described later, on the first day of the month. Turbotax 2009 You have no other health coverage except what is permitted under Other health coverage , later. Turbotax 2009 You are not enrolled in Medicare. Turbotax 2009 You cannot be claimed as a dependent on someone else's 2013 tax return. Turbotax 2009 Under the last-month rule, you are considered to be an eligible individual for the entire year if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers). Turbotax 2009 If you meet these requirements, you are an eligible individual even if your spouse has non-HDHP family coverage, provided your spouse's coverage does not cover you. Turbotax 2009 If another taxpayer is entitled to claim an exemption for you, you cannot claim a deduction for an HSA contribution. Turbotax 2009 This is true even if the other person does not actually claim your exemption. Turbotax 2009 Each spouse who is an eligible individual who wants an HSA must open a separate HSA. Turbotax 2009 You cannot have a joint HSA. Turbotax 2009 High deductible health plan (HDHP). Turbotax 2009   An HDHP has: A higher annual deductible than typical health plans, and A maximum limit on the sum of the annual deductible and out-of-pocket medical expenses that you must pay for covered expenses. Turbotax 2009 Out-of-pocket expenses include copayments and other amounts, but do not include premiums. Turbotax 2009   An HDHP may provide preventive care benefits without a deductible or with a deductible less than the minimum annual deductible. Turbotax 2009 Preventive care includes, but is not limited to, the following. Turbotax 2009 Periodic health evaluations, including tests and diagnostic procedures ordered in connection with routine examinations, such as annual physicals. Turbotax 2009 Routine prenatal and well-child care. Turbotax 2009 Child and adult immunizations. Turbotax 2009 Tobacco cessation programs. Turbotax 2009 Obesity weight-loss programs. Turbotax 2009 Screening services. Turbotax 2009 This includes screening services for the following: Cancer. Turbotax 2009 Heart and vascular diseases. Turbotax 2009 Infectious diseases. Turbotax 2009 Mental health conditions. Turbotax 2009 Substance abuse. Turbotax 2009 Metabolic, nutritional, and endocrine conditions. Turbotax 2009 Musculoskeletal disorders. Turbotax 2009 Obstetric and gynecological conditions. Turbotax 2009 Pediatric conditions. Turbotax 2009 Vision and hearing disorders. Turbotax 2009 For more information on screening services, see Notice 2004-23, 2004-15 I. Turbotax 2009 R. Turbotax 2009 B. Turbotax 2009 725 available at www. Turbotax 2009 irs. Turbotax 2009 gov/irb/2004-15_IRB/ar10. Turbotax 2009 html. Turbotax 2009     The following table shows the minimum annual deductible and maximum annual deductible and other out-of-pocket expenses for HDHPs for 2013. Turbotax 2009      Self-only coverage Family coverage Minimum annual deductible $1,250 $2,500 Maximum annual deductible and other out-of-pocket expenses* $6,250 $12,500 * This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. Turbotax 2009 Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit applies. Turbotax 2009    The following table shows the minimum annual deductible and maximum annual deductible and other out-of-pocket expenses for HDHPs for 2014. Turbotax 2009      Self-only coverage Family coverage Minimum annual deductible $1,250 $2,500 Maximum annual deductible and other out-of-pocket expenses* $6,350 $12,700 * This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. Turbotax 2009 Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit applies. Turbotax 2009   Self-only HDHP coverage is an HDHP covering only an eligible individual. Turbotax 2009 Family HDHP coverage is an HDHP covering an eligible individual and at least one other individual (whether or not that individual is an eligible individual). Turbotax 2009 Example. Turbotax 2009 An eligible individual and his dependent child are covered under an “employee plus one” HDHP offered by the individual's employer. Turbotax 2009 This is family HDHP coverage. Turbotax 2009 Family plans that do not meet the high deductible rules. Turbotax 2009   There are some family plans that have deductibles for both the family as a whole and for individual family members. Turbotax 2009 Under these plans, if you meet the individual deductible for one family member, you do not have to meet the higher annual deductible amount for the family. Turbotax 2009 If either the deductible for the family as a whole or the deductible for an individual family member is less than the minimum annual deductible for family coverage, the plan does not qualify as an HDHP. Turbotax 2009 Example. Turbotax 2009 You have family health insurance coverage in 2013. Turbotax 2009 The annual deductible for the family plan is $3,500. Turbotax 2009 This plan also has an individual deductible of $1,500 for each family member. Turbotax 2009 The plan does not qualify as an HDHP because the deductible for an individual family member is less than the minimum annual deductible ($2,500) for family coverage. Turbotax 2009 Other health coverage. Turbotax 2009   You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not an HDHP. Turbotax 2009 However, you can still be an eligible individual even if your spouse has non-HDHP coverage provided you are not covered by that plan. Turbotax 2009    You can have additional insurance that provides benefits only for the following items. Turbotax 2009 Liabilities incurred under workers' compensation laws, tort liabilities, or liabilities related to ownership or use of property. Turbotax 2009 A specific disease or illness. Turbotax 2009 A fixed amount per day (or other period) of hospitalization. Turbotax 2009   You can also have coverage (whether provided through insurance or otherwise) for the following items. Turbotax 2009 Accidents. Turbotax 2009 Disability. Turbotax 2009 Dental care. Turbotax 2009 Vision care. Turbotax 2009 Long-term care. Turbotax 2009    Plans in which substantially all of the coverage is through the items listed earlier are not HDHPs. Turbotax 2009 For example, if your plan provides coverage substantially all of which is for a specific disease or illness, the plan is not an HDHP for purposes of establishing an HSA. Turbotax 2009 Prescription drug plans. Turbotax 2009   You can have a prescription drug plan, either as part of your HDHP or a separate plan (or rider), and qualify as an eligible individual if the plan does not provide benefits until the minimum annual deductible of the HDHP has been met. Turbotax 2009 If you can receive benefits before that deductible is met, you are not an eligible individual. Turbotax 2009 Other employee health plans. Turbotax 2009   An employee covered by an HDHP and a health FSA or an HRA that pays or reimburses qualified medical expenses generally cannot make contributions to an HSA. Turbotax 2009 Health FSAs and HRAs are discussed later. Turbotax 2009   However, an employee can make contributions to an HSA while covered under an HDHP and one or more of the following arrangements. Turbotax 2009 Limited-purpose health FSA or HRA. Turbotax 2009 These arrangements can pay or reimburse the items listed earlier under Other health coverage except long-term care. Turbotax 2009 Also, these arrangements can pay or reimburse preventive care expenses because they can be paid without having to satisfy the deductible. Turbotax 2009 Suspended HRA. Turbotax 2009 Before the beginning of an HRA coverage period, you can elect to suspend the HRA. Turbotax 2009 The HRA does not pay or reimburse, at any time, the medical expenses incurred during the suspension period except preventive care and items listed under Other health coverage. Turbotax 2009 When the suspension period ends, you are no longer eligible to make contributions to an HSA. Turbotax 2009 Post-deductible health FSA or HRA. Turbotax 2009 These arrangements do not pay or reimburse any medical expenses incurred before the minimum annual deductible amount is met. Turbotax 2009 The deductible for these arrangements does not have to be the same as the deductible for the HDHP, but benefits may not be provided before the minimum annual deductible amount is met. Turbotax 2009 Retirement HRA. Turbotax 2009 This arrangement pays or reimburses only those medical expenses incurred after retirement. Turbotax 2009 After retirement you are no longer eligible to make contributions to an HSA. Turbotax 2009 Health FSA – grace period. Turbotax 2009   Coverage during a grace period by a general purpose health FSA is allowed if the balance in the health FSA at the end of its prior year plan is zero. Turbotax 2009 See Flexible Spending Arrangements (FSAs) , later. Turbotax 2009 Contributions to an HSA Any eligible individual can contribute to an HSA. Turbotax 2009 For an employee's HSA, the employee, the employee's employer, or both may contribute to the employee's HSA in the same year. Turbotax 2009 For an HSA established by a self-employed (or unemployed) individual, the individual can contribute. Turbotax 2009 Family members or any other person may also make contributions on behalf of an eligible individual. Turbotax 2009 Contributions to an HSA must be made in cash. Turbotax 2009 Contributions of stock or property are not allowed. Turbotax 2009 Limit on Contributions The amount you or any other person can contribute to your HSA depends on the type of HDHP coverage you have, your age, the date you become an eligible individual, and the date you cease to be an eligible individual. Turbotax 2009 For 2013, if you have self-only HDHP coverage, you can contribute up to $3,250. Turbotax 2009 If you have family HDHP coverage, you can contribute up to $6,450. Turbotax 2009 For 2014, if you have self-only HDHP coverage, you can contribute up to $3,300. Turbotax 2009 If you have family HDHP coverage you can contribute up to $6,550. Turbotax 2009 If you were, or were considered (under the last-month rule, discussed later), an eligible individual for the entire year and did not change your type of coverage, you can contribute the full amount based on your type of coverage. Turbotax 2009 However, if you were not an eligible individual for the entire year or changed your coverage during the year, your contribution limit is the greater of: The limitation shown on the Line 3 Limitation Chart and Worksheetin the Instructions for Form 8889, Health Savings Accounts (HSAs), or The maximum annual HSA contribution based on your HDHP coverage (self-only or family) on the first day of the last month of your tax year. Turbotax 2009 If you had family HDHP coverage on the first day of the last month of your tax year, your contribution limit for 2013 is $6,450 even if you changed coverage during the year. Turbotax 2009 Last-month rule. Turbotax 2009   Under the last-month rule, if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers), you are considered an eligible individual for the entire year. Turbotax 2009 You are treated as having the same HDHP coverage for the entire year as you had on the first day of the last month. Turbotax 2009 Testing period. Turbotax 2009   If contributions were made to your HSA based on you being an eligible individual for the entire year under the last-month rule, you must remain an eligible individual during the testing period. Turbotax 2009 For the last-month rule, the testing period begins with the last month of your tax year and ends on the last day of the 12th month following that month. Turbotax 2009 For example, December 1, 2013, through December 31, 2014. Turbotax 2009   If you fail to remain an eligible individual during the testing period, other than because of death or becoming disabled, you will have to include in income the total contributions made to your HSA that would not have been made except for the last-month rule. Turbotax 2009 You include this amount in your income in the year in which you fail to be an eligible individual. Turbotax 2009 This amount is also subject to a 10% additional tax. Turbotax 2009 The income and additional tax are shown on Form 8889, Part III. Turbotax 2009 Example 1. Turbotax 2009 Chris, age 53, becomes an eligible individual on December 1, 2013. Turbotax 2009 He has family HDHP coverage on that date. Turbotax 2009 Under the last-month rule, he contributes $6,450 to his HSA. Turbotax 2009 Chris fails to be an eligible individual in June 2014. Turbotax 2009 Because Chris did not remain an eligible individual during the testing period (December 1, 2013, through December 31, 2014), he must include in his 2014 income the contributions made in 2013 that would not have been made except for the last-month rule. Turbotax 2009 Chris uses the worksheet in the Form 8889 instructions to determine this amount. Turbotax 2009 January -0- February -0- March -0- April -0- May -0- June -0- July -0- August -0- September -0- October -0- November -0- December $6,450. Turbotax 2009 00 Total for all months $6,450. Turbotax 2009 00 Limitation. Turbotax 2009 Divide the total by 12 $537. Turbotax 2009 50 Chris would include $5,912. Turbotax 2009 50 ($6,450. Turbotax 2009 00 – $537. Turbotax 2009 50) in his gross income on his 2014 tax return. Turbotax 2009 Also, a 10% additional tax applies to this amount. Turbotax 2009 Example 2. Turbotax 2009 Erika, age 39, has self-only HDHP coverage on January 1, 2013. Turbotax 2009 Erika changes to family HDHP coverage on November 1, 2013. Turbotax 2009 Because Erika has family HDHP coverage on December 1, 2013, she contributes $6,450 for 2013. Turbotax 2009 Erika fails to be an eligible individual in March 2014. Turbotax 2009 Because she did not remain an eligible individual during the testing period (December 1, 2013, through December 31, 2014), she must include in income the contribution made that would not have been made except for the last-month rule. Turbotax 2009 Erika uses the worksheet in the Form 8889 instructions to determine this amount. Turbotax 2009 January $3,250. Turbotax 2009 00 February $3,250. Turbotax 2009 00 March $3,250. Turbotax 2009 00 April $3,250. Turbotax 2009 00 May $3,250. Turbotax 2009 00 June $3,250. Turbotax 2009 00 July $3,250. Turbotax 2009 00 August $3,250. Turbotax 2009 00 September $3,250. Turbotax 2009 00 October $3,250. Turbotax 2009 00 November $6,450. Turbotax 2009 00 December $6,450. Turbotax 2009 00 Total for all months $45,400. Turbotax 2009 00 Limitation. Turbotax 2009 Divide the total by 12 $3,783. Turbotax 2009 34 Erika would include $2,666. Turbotax 2009 67 ($6,450 – $3,783. Turbotax 2009 34) in her gross income on her 2014 tax return. Turbotax 2009 Also, a 10% additional tax applies to this amount. Turbotax 2009 Additional contribution. Turbotax 2009   If you are an eligible individual who is age 55 or older at the end of your tax year, your contribution limit is increased by $1,000. Turbotax 2009 For example, if you have self-only coverage, you can contribute up to $4,250 (the contribution limit for self-only coverage ($3,250) plus the additional contribution of $1,000). Turbotax 2009 However, see Enrolled in Medicare , later. Turbotax 2009 If you have more than one HSA in 2013, your total contributions to all the HSAs cannot be more than the limits discussed earlier. Turbotax 2009 Reduction of contribution limit. Turbotax 2009   You must reduce the amount that can be contributed (including any additional contribution) to your HSA by the amount of any contribution made to your Archer MSA (including employer contributions) for the year. Turbotax 2009 A special rule applies to married people, discussed next, if each spouse has family coverage under an HDHP. Turbotax 2009 Rules for married people. Turbotax 2009   If either spouse has family HDHP coverage, both spouses are treated as having family HDHP coverage. Turbotax 2009 If each spouse has family coverage under a separate plan, the contribution limit for 2013 is $6,450. Turbotax 2009 You must reduce the limit on contributions, before taking into account any additional contributions, by the amount contributed to both spouses' Archer MSAs. Turbotax 2009 After that reduction, the contribution limit is split equally between the spouses unless you agree on a different division. Turbotax 2009 The rules for married people apply only if both spouses are eligible individuals. Turbotax 2009 If both spouses are 55 or older and not enrolled in Medicare, each spouse's contribution limit is increased by the additional contribution. Turbotax 2009 If both spouses meet the age requirement, the total contributions under family coverage cannot be more than $8,450. Turbotax 2009 Each spouse must make the additional contribution to his or her own HSA. Turbotax 2009 Example. Turbotax 2009 For 2013, Mr. Turbotax 2009 Auburn and his wife are both eligible individuals. Turbotax 2009 They each have family coverage under separate HDHPs. Turbotax 2009 Mr. Turbotax 2009 Auburn is 58 years old and Mrs. Turbotax 2009 Auburn is 53. Turbotax 2009 Mr. Turbotax 2009 and Mrs. Turbotax 2009 Auburn can split the family contribution limit ($6,450) equally or they can agree on a different division. Turbotax 2009 If they split it equally, Mr. Turbotax 2009 Auburn can contribute $4,225 to an HSA (one-half the maximum contribution for family coverage ($3,225) + $1,000 additional contribution) and Mrs. Turbotax 2009 Auburn can contribute $3,225 to an HSA. Turbotax 2009 Employer contributions. Turbotax 2009   You must reduce the amount you, or any other person, can contribute to your HSA by the amount of any contributions made by your employer that are excludable from your income. Turbotax 2009 This includes amounts contributed to your account by your employer through a cafeteria plan. Turbotax 2009 Enrolled in Medicare. Turbotax 2009   Beginning with the first month you are enrolled in Medicare, your contribution limit is zero. Turbotax 2009 Example. Turbotax 2009 You turned age 65 in July 2013 and enrolled in Medicare. Turbotax 2009 You had an HDHP with self-only coverage and are eligible for an additional contribution of $1,000. Turbotax 2009 Your contribution limit is $2,125 ($4,250 × 6 ÷ 12). Turbotax 2009 Qualified HSA funding distribution. Turbotax 2009   A qualified HSA funding distribution may be made from your traditional IRA or Roth IRA to your HSA. Turbotax 2009 This distribution cannot be made from an ongoing SEP IRA or SIMPLE IRA. Turbotax 2009 For this purpose, a SEP IRA or SIMPLE IRA is ongoing if an employer contribution is made for the plan year ending with or within your tax year in which the distribution would be made. Turbotax 2009   The maximum qualified HSA funding distribution depends on the HDHP coverage (self-only or family) you have on the first day of the month in which the contribution is made and your age as of the end of the tax year. Turbotax 2009 The distribution must be made directly by the trustee of the IRA to the trustee of the HSA. Turbotax 2009 The distribution is not included in your income, is not deductible, and reduces the amount that can be contributed to your HSA. Turbotax 2009 The qualified HSA funding distribution is shown on Form 8889 for the year in which the distribution is made. Turbotax 2009   You can make only one qualified HSA funding distribution during your lifetime. Turbotax 2009 However, if you make a distribution during a month when you have self-only HDHP coverage, you can make another qualified HSA funding distribution in a later month in that tax year if you change to family HDHP coverage. Turbotax 2009 The total qualified HSA funding distribution cannot be more than the contribution limit for family HDHP coverage plus any additional contribution to which you are entitled. Turbotax 2009 Example. Turbotax 2009 In 2013, you are an eligible individual, age 57, with self-only HDHP coverage. Turbotax 2009 You can make a qualified HSA funding distribution of $4,250 ($3,250 plus $1,000 additional contribution). Turbotax 2009 Funding distribution – testing period. Turbotax 2009   You must remain an eligible individual during the testing period. Turbotax 2009 For a qualified HSA funding distribution, the testing period begins with the month in which the qualified HSA funding distribution is contributed and ends on the last day of the 12th month following that month. Turbotax 2009 For example, if a qualified HSA funding distribution is contributed to your HSA on August 10, 2013, your testing period begins in August 2013, and ends on August 31, 2014. Turbotax 2009   If you fail to remain an eligible individual during the testing period, other than because of death or becoming disabled, you will have to include in income the qualified HSA funding distribution. Turbotax 2009 You include this amount in income in the year in which you fail to be an eligible individual. Turbotax 2009 This amount is also subject to a 10% additional tax. Turbotax 2009 The income and the additional tax are shown on Form 8889, Part III. Turbotax 2009   Each qualified HSA funding distribution allowed has its own testing period. Turbotax 2009 For example, you are an eligible individual, age 45, with self-only HDHP coverage. Turbotax 2009 On June 18, 2013, you make a qualified HSA funding distribution of $3,250. Turbotax 2009 On July 27, 2013, you enroll in family HDHP coverage and on August 17, 2013, you make a qualified HSA funding distribution of $3,200. Turbotax 2009 Your testing period for the first distribution begins in June 2013 and ends on June 30, 2014. Turbotax 2009 Your testing period for the second distribution begins in August 2013 and ends on August 31, 2014. Turbotax 2009   The testing period rule that applies under the last-month rule (discussed earlier) does not apply to amounts contributed to an HSA through a qualified HSA funding distribution. Turbotax 2009 If you remain an eligible individual during the entire funding distribution testing period, then no amount of that distribution is included in income and will not be subject to the additional tax for failing to meet the last-month rule testing period. Turbotax 2009 Rollovers A rollover contribution is not included in your income, is not deductible, and does not reduce your contribution limit. Turbotax 2009 Archer MSAs and other HSAs. Turbotax 2009   You can roll over amounts from Archer MSAs and other HSAs into an HSA. Turbotax 2009 You do not have to be an eligible individual to make a rollover contribution from your existing HSA to a new HSA. Turbotax 2009 Rollover contributions do not need to be in cash. Turbotax 2009 Rollovers are not subject to the annual contribution limits. Turbotax 2009   You must roll over the amount within 60 days after the date of receipt. Turbotax 2009 You can make only one rollover contribution to an HSA during a 1-year period. Turbotax 2009 Note. Turbotax 2009 If you instruct the trustee of your HSA to transfer funds directly to the trustee of another of your HSAs, the transfer is not considered a rollover. Turbotax 2009 There is no limit on the number of these transfers. Turbotax 2009 Do not include the amount transferred in income, deduct it as a contribution, or include it as a distribution on Form 8889. Turbotax 2009 When To Contribute You can make contributions to your HSA for 2013 until April 15, 2014. Turbotax 2009 If you fail to be an eligible individual during 2013, you can still make contributions, up until April 15, 2014, for the months you were an eligible individual. Turbotax 2009 Your employer can make contributions to your HSA between January 1, 2014, and April 15, 2014, that are allocated to 2013. Turbotax 2009 Your employer must notify you and the trustee of your HSA that the contribution is for 2013. Turbotax 2009 The contribution will be reported on your 2014 Form W-2. Turbotax 2009 Reporting Contributions on Your Return Contributions made by your employer are not included in your income. Turbotax 2009 Contributions to an employee's account by an employer using the amount of an employee's salary reduction through a cafeteria plan are treated as employer contributions. Turbotax 2009 Generally, you can claim contributions you made and contributions made by any other person, other than your employer, on your behalf, as an adjustment to income. Turbotax 2009 Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. Turbotax 2009 The contributions are treated as a distribution of money and are not included in the partner's gross income. Turbotax 2009 Contributions by a partnership to a partner's HSA for services rendered are treated as guaranteed payments that are deductible by the partnership and includible in the partner's gross income. Turbotax 2009 In both situations, the partner can deduct the contribution made to the partner's HSA. Turbotax 2009 Contributions by an S corporation to a 2% shareholder-employee's HSA for services rendered are treated as guaranteed payments and are deductible by the S corporation and includible in the shareholder-employee's gross income. Turbotax 2009 The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. Turbotax 2009 Form 8889. Turbotax 2009   Report all contributions to your HSA on Form 8889 and file it with your Form 1040 or Form 1040NR. Turbotax 2009 You should include all contributions made for 2013, including those made by April 15, 2014, that are designated for 2013. Turbotax 2009 Contributions made by your employer and qualified HSA funding distributions are also shown on the form. Turbotax 2009   You should receive Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, from the trustee showing the amount contributed to your HSA during the year. Turbotax 2009 Your employer's contributions also will be shown in box 12 of Form W-2, Wage and Tax Statement, with code W. Turbotax 2009 Follow the instructions for Form 8889. Turbotax 2009 Report your HSA deduction on Form 1040 or Form 1040NR. Turbotax 2009 Excess contributions. Turbotax 2009   You will have excess contributions if the contributions to your HSA for the year are greater than the limits discussed earlier. Turbotax 2009 Excess contributions are not deductible. Turbotax 2009 Excess contributions made by your employer are included in your gross income. Turbotax 2009 If the excess contribution is not included in box 1 of Form W-2, you must report the excess as “Other income” on your tax return. Turbotax 2009   Generally, you must pay a 6% excise tax on excess contributions. Turbotax 2009 See Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. Turbotax 2009 The excise tax applies to each tax year the excess contribution remains in the account. Turbotax 2009   You may withdraw some or all of the excess contributions and not pay the excise tax on the amount withdrawn if you meet the following conditions. Turbotax 2009 You withdraw the excess contributions by the due date, including extensions, of your tax return for the year the contributions were made. Turbotax 2009 You withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings. Turbotax 2009 If you fail to remain an eligible individual during any of the testing periods, discussed earlier, the amount you have to include in income is not an excess contribution. Turbotax 2009 If you withdraw any of those amounts, the amount is treated the same as any other distribution from an HSA, discussed later. Turbotax 2009 Deducting an excess contribution in a later year. Turbotax 2009   You may be able to deduct excess contributions for previous years that are still in your HSA. Turbotax 2009 The excess contribution you can deduct for the current year is the lesser of the following two amounts. Turbotax 2009 Your maximum HSA contribution limit for the year minus any amounts contributed to your HSA for the year. Turbotax 2009 The total excess contributions in your HSA at the beginning of the year. Turbotax 2009   Amounts contributed for the year include contributions by you, your employer, and any other person. Turbotax 2009 They also include any qualified HSA funding distribution made to your HSA. Turbotax 2009 Any excess contribution remaining at the end of a tax year is subject to the excise tax. Turbotax 2009 See Form 5329. Turbotax 2009 Distributions From an HSA You will generally pay medical expenses during the year without being reimbursed by your HDHP until you reach the annual deductible for the plan. Turbotax 2009 When you pay medical expenses during the year that are not reimbursed by your HDHP, you can ask the trustee of your HSA to send you a distribution from your HSA. Turbotax 2009 You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. Turbotax 2009 If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax. Turbotax 2009 You do not have to make distributions from your HSA each year. Turbotax 2009 If you are no longer an eligible individual, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses. Turbotax 2009 Generally, a distribution is money you get from your health savings account. Turbotax 2009 Your total distributions include amounts paid with a debit card that restricts payments to health care and amounts withdrawn from the HSA by other individuals that you have designated. Turbotax 2009 The trustee will report any distribution to you and the IRS on Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. Turbotax 2009 Qualified medical expenses. Turbotax 2009   Qualified medical expenses are those expenses that would generally qualify for the medical and dental expenses deduction. Turbotax 2009 These are explained in Publication 502, Medical and Dental Expenses. Turbotax 2009   Also, non-prescription medicines (other than insulin) are not considered qualified medical expenses for HSA purposes. Turbotax 2009 A medicine or drug will be a qualified medical expense for HSA purposes only if the medicine or drug: Requires a prescription, Is available without a prescription (an over-the-counter medicine or drug) and you get a prescription for it, or Is insulin. Turbotax 2009   For HSA purposes, expenses incurred before you establish your HSA are not qualified medical expenses. Turbotax 2009 State law determines when an HSA is established. Turbotax 2009 An HSA that is funded by amounts rolled over from an Archer MSA or another HSA is established on the date the prior account was established. Turbotax 2009   If, under the last-month rule, you are considered to be an eligible individual for the entire year for determining the contribution amount, only those expenses incurred after you actually establish your HSA are qualified medical expenses. Turbotax 2009   Qualified medical expenses are those incurred by the following persons. Turbotax 2009 You and your spouse. Turbotax 2009 All dependents you claim on your tax return. Turbotax 2009 Any person you could have claimed as a dependent on your return except that: The person filed a joint return, The person had gross income of $3,900 or more, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Turbotax 2009    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. Turbotax 2009 You cannot deduct qualified medical expenses as an itemized deduction on Schedule A (Form 1040) that are equal to the tax-free distribution from your HSA. Turbotax 2009 Insurance premiums. Turbotax 2009   You cannot treat insurance premiums as qualified medical expenses unless the premiums are for: Long-term care insurance. Turbotax 2009 Health care continuation coverage (such as coverage under COBRA). Turbotax 2009 Health care coverage while receiving unemployment compensation under federal or state law. Turbotax 2009 Medicare and other health care coverage if you were 65 or older (other than premiums for a Medicare supplemental policy, such as Medigap). Turbotax 2009   The premiums for long-term care insurance (item (1)) that you can treat as qualified medical expenses are subject to limits based on age and are adjusted annually. Turbotax 2009 See Limit on long-term care premiums you can deduct in the instructions for Schedule A (Form 1040). Turbotax 2009   Items (2) and (3) can be for your spouse or a dependent meeting the requirement for that type of coverage. Turbotax 2009 For item (4), if you, the account beneficiary, are not 65 or older, Medicare premiums for coverage of your spouse or a dependent (who is 65 or older) generally are not qualified medical expenses. Turbotax 2009 Health coverage tax credit. Turbotax 2009   You cannot claim this credit for premiums that you pay with a tax-free distribution from your HSA. Turbotax 2009 See Publication 502 for more information on this credit. Turbotax 2009 Deemed distributions from HSAs. Turbotax 2009   The following situations result in deemed taxable distributions from your HSA. Turbotax 2009 You engaged in any transaction prohibited by section 4975 with respect to any of your HSAs, at any time in 2013. Turbotax 2009 Your account ceases to be an HSA as of January 1, 2013, and you must include the fair market value of all assets in the account as of January 1, 2013, on Form 8889. Turbotax 2009 You used any portion of any of your HSAs as security for a loan at any time in 2013. Turbotax 2009 You must include the fair market value of the assets used as security for the loan as income on Form 1040 or Form 1040NR. Turbotax 2009   Examples of prohibited transactions include the direct or indirect: Sale, exchange, or leasing of property between you and the HSA, Lending of money between you and the HSA, Furnishing goods, services, or facilities between you and the HSA, and Transfer to or use by you, or for your benefit, of any assets of the HSA. Turbotax 2009   Any deemed distribution will not be treated as used to pay qualified medical expenses. Turbotax 2009 These distributions are included in your income and are subject to the additional 20% tax, discussed later. Turbotax 2009 Recordkeeping. Turbotax 2009 You must keep records sufficient to show that: The distributions were exclusively to pay or reimburse qualified medical expenses, The qualified medical expenses had not been previously paid or reimbursed from another source, and The medical expenses had not been taken as an itemized deduction in any year. Turbotax 2009 Do not send these records with your tax return. Turbotax 2009 Keep them with your tax records. Turbotax 2009 Reporting Distributions on Your Return How you report your distributions depends on whether or not you use the distribution for qualified medical expenses (defined earlier). Turbotax 2009 If you use a distribution from your HSA for qualified medical expenses, you do not pay tax on the distribution but you have to report the distribution on Form 8889. Turbotax 2009 However, the distribution of an excess contribution taken out after the due date, including extensions, of your return is subject to tax even if used for qualified medical expenses. Turbotax 2009 Follow the instructions for the form and file it with your Form 1040 or Form 1040NR. Turbotax 2009 If you do not use a distribution from your HSA for qualified medical expenses, you must pay tax on the distribution. Turbotax 2009 Report the amount on Form 8889 and file it with your Form 1040 or Form 1040NR. Turbotax 2009 You may have to pay an additional 20% tax on your taxable distribution. Turbotax 2009 HSA administration and maintenance fees withdrawn by the trustee are not reported as distributions from the HSA. Turbotax 2009 Additional tax. Turbotax 2009   There is an additional 20% tax on the part of your distributions not used for qualified medical expenses. Turbotax 2009 Figure the tax on Form 8889 and file it with your Form 1040 or Form 1040NR. Turbotax 2009 Exceptions. Turbotax 2009   There is no additional tax on distributions made after the date you are disabled, reach age 65, or die. Turbotax 2009 Balance in an HSA An HSA is generally exempt from tax. Turbotax 2009 You are permitted to take a distribution from your HSA at any time; however, only those amounts used exclusively to pay for qualified medical expenses are tax free. Turbotax 2009 Amounts that remain at the end of the year are generally carried over to the next year (see Excess contributions , earlier). Turbotax 2009 Earnings on amounts in an HSA are not included in your income while held in the HSA. Turbotax 2009 Death of HSA Holder You should choose a beneficiary when you set up your HSA. Turbotax 2009 What happens to that HSA when you die depends on whom you designate as the beneficiary. Turbotax 2009 Spouse is the designated beneficiary. Turbotax 2009   If your spouse is the designated beneficiary of your HSA, it will be treated as your spouse's HSA after your death. Turbotax 2009 Spouse is not the designated beneficiary. Turbotax 2009   If your spouse is not the designated beneficiary of your HSA: The account stops being an HSA, and The fair market value of the HSA becomes taxable to the beneficiary in the year in which you die. Turbotax 2009 If your estate is the beneficiary, the value is included on your final income tax return. Turbotax 2009 The amount taxable to a beneficiary other than the estate is reduced by any qualified medical expenses for the decedent that are paid by the beneficiary within 1 year after the date of death. Turbotax 2009 Filing Form 8889 You must file Form 8889 with your Form 1040 or Form 1040NR if you (or your spouse, if married filing a joint return) had any activity in your HSA during the year. Turbotax 2009 You must file the form even if only your employer or your spouse's employer made contributions to the HSA. Turbotax 2009 If, during the tax year, you are the beneficiary of two or more HSAs or you are a beneficiary of an HSA and you have your own HSA, you must complete a separate Form 8889 for each HSA. Turbotax 2009 Enter “statement” at the top of each Form 8889 and complete the form as instructed. Turbotax 2009 Next, complete a controlling Form 8889 combining the amounts shown on each of the statement Forms 8889. Turbotax 2009 Attach the statements to your tax return after the controlling Form 8889. Turbotax 2009 Employer Participation This section contains the rules that employers must follow if they decide to make HSAs available to their employees. Turbotax 2009 Unlike the previous discussions, “you” refers to the employer and not to the employee. Turbotax 2009 Health plan. Turbotax 2009   If you want your employees to be able to have an HSA, they must have an HDHP. Turbotax 2009 You can provide no additional coverage other than those exceptions listed previously under Other health coverage . Turbotax 2009 Contributions. Turbotax 2009   You can make contributions to your employees' HSAs. Turbotax 2009 You deduct the contributions on your business income tax return for the year in which you make the contributions. Turbotax 2009 If the contribution is allocated to the prior year, you still deduct it in the year in which you made the contribution. Turbotax 2009   For more information on employer contributions, see Notice 2008-59, 2008-29 I. Turbotax 2009 R. Turbotax 2009 B. Turbotax 2009 123, questions 23 through 27, available at www. Turbotax 2009 irs. Turbotax 2009 gov/irb/2008-29_IRB/ar11. Turbotax 2009 html. Turbotax 2009 Comparable contributions. Turbotax 2009   If you decide to make contributions, you must make comparable contributions to all comparable participating employees' HSAs. Turbotax 2009 Your contributions are comparable if they are either: The same amount, or The same percentage of the annual deductible limit under the HDHP covering the employees. Turbotax 2009 The comparability rules do not apply to contributions made through a cafeteria plan. Turbotax 2009 Comparable participating employees. Turbotax 2009   Comparable participating employees: Are covered by your HDHP and are eligible to establish an HSA, Have the same category of coverage (either self-only or family coverage), and Have the same category of employment (part-time, full-time, or former employees). Turbotax 2009   To meet the comparability requirements for eligible employees who have not established an HSA by December 31 or have not notified you that they have an HSA, you must meet a notice requirement and a contribution requirement. Turbotax 2009   You will meet the notice requirement if by January 15 of the following calendar year you provide a written notice to all such employees. Turbotax 2009 The notice must state that each eligible employee who, by the last day of February, establishes an HSA and notifies you that they have established an HSA will receive a comparable contribution to the HSA for the prior year. Turbotax 2009 For a sample of the notice, see Regulation 54. Turbotax 2009 4980G-4 A-14(c). Turbotax 2009 You will meet the contribution requirement for these employees if by April 15, 2014, you contribute comparable amounts plus reasonable interest to the employee's HSA for the prior year. Turbotax 2009 Note. Turbotax 2009 For purposes of making contributions to HSAs of non-highly compensated employees, highly compensated employees shall not be treated as comparable participating employees. Turbotax 2009 Excise tax. Turbotax 2009   If you made contributions to your employees' HSAs that were not comparable, you must pay an excise tax of 35% of the amount you contributed. Turbotax 2009 Employment taxes. Turbotax 2009   Amounts you contribute to your employees' HSAs are generally not subject to employment taxes. Turbotax 2009 You must report the contributions in box 12 of the Form W-2 you file for each employee. Turbotax 2009 This includes the amounts the employee elected to contribute through a cafeteria plan. Turbotax 2009 Enter code “W” in box 12. Turbotax 2009 Medical Savings Accounts (MSAs) Archer MSAs were created to help self-employed individuals and employees of certain small employers meet the medical care costs of the account holder, the account holder's spouse, or the account holder's dependent(s). Turbotax 2009 After December 31, 2007, you cannot be treated as an eligible individual for Archer MSA purposes unless: You were an active participant for any tax year ending before January 1, 2008, or You became an active participant for a tax year ending after December 31, 2007, by reason of coverage under a high deductible health plan (HDHP) of an Archer MSA participating employer. Turbotax 2009 A Medicare Advantage MSA is an Archer MSA designated by Medicare to be used solely to pay the qualified medical expenses of the account holder who is eligible for Medicare. Turbotax 2009 Archer MSAs An Archer MSA is a tax-exempt trust or custodial account that you set up with a U. Turbotax 2009 S. Turbotax 2009 financial institution (such as a bank or an insurance company) in which you can save money exclusively for future medical expenses. Turbotax 2009 What are the benefits of an Archer MSA?   You may enjoy several benefits from having an Archer MSA. Turbotax 2009 You can claim a tax deduction for contributions you make even if you do not itemize your deductions on Form 1040 or Form 1040NR. Turbotax 2009 The interest or other earnings on the assets in your Archer MSA are tax free. Turbotax 2009 Distributions may be tax free if you pay qualified medical expenses. Turbotax 2009 See Qualified medical expenses , later. Turbotax 2009 The contributions remain in your Archer MSA from year to year until you use them. Turbotax 2009 An Archer MSA is “portable” so it stays with you if you change employers or leave the work force. Turbotax 2009 Qualifying for an Archer MSA To qualify for an Archer MSA, you must be either of the following. Turbotax 2009 An employee (or the spouse of an employee) of a small employer (defined later) that maintains a self-only or family HDHP for you (or your spouse). Turbotax 2009 A self-employed person (or the spouse of a self-employed person) who maintains a self-only or family HDHP. Turbotax 2009 You can have no other health or Medicare coverage except what is permitted under Other health coverage , later. Turbotax 2009 You must be an eligible individual on the first day of a given month to get an Archer MSA deduction for that month. Turbotax 2009 If another taxpayer is entitled to claim an exemption for you, you cannot claim a deduction for an Archer MSA contribution. Turbotax 2009 This is true even if the other person does not actually claim your exemption. Turbotax 2009 Small employer. Turbotax 2009   A small employer is generally an employer who had an average of 50 or fewer employees during either of the last 2 calendar years. Turbotax 2009 The definition of small employer is modified for new employers and growing employers. Turbotax 2009 Growing employer. Turbotax 2009   A small employer may begin HDHPs and Archer MSAs for his or her employees and then grow beyond 50 employees. Turbotax 2009 The employer will continue to meet the requirement for small employers if he or she: Had 50 or fewer employees when the Archer MSAs began, Made a contribution that was excludable or deductible as an Archer MSA for the last year he or she had 50 or fewer employees, and Had an average of 200 or fewer employees each year after 1996. Turbotax 2009 Changing employers. Turbotax 2009   If you change employers, your Archer MSA moves with you. Turbotax 2009 However, you may not make additional contributions unless you are otherwise eligible. Turbotax 2009 High deductible health plan (HDHP). Turbotax 2009   To be eligible for an Archer MSA, you must be covered under an HDHP. Turbotax 2009 An HDHP has: A higher annual deductible than typical health plans, and A maximum limit on the annual out-of-pocket medical expenses that you must pay for covered expenses. Turbotax 2009 Limits. Turbotax 2009   The following table shows the limits for annual deductibles and the maximum out-of-pocket expenses for HDHPs for 2013. Turbotax 2009   Self-only coverage Family coverage Minimum annual deductible $2,150 $4,300 Maximum annual deductible $3,200 $6,450 Maximum annual out-of-pocket expenses $4,300 $7,850 Family plans that do not meet the high deductible rules. Turbotax 2009   There are some family plans that have deductibles for both the family as a whole and for individual family members. Turbotax 2009 Under these plans, if you meet the individual deductible for one family member, you do not have to meet the higher annual deductible amount for the family. Turbotax 2009 If either the deductible for the family as a whole or the deductible for an individual family member is less than the minimum annual deductible for family coverage, the plan does not qualify as an HDHP. Turbotax 2009 Example. Turbotax 2009 You have family health insurance coverage in 2013. Turbotax 2009 The annual deductible for the family plan is $5,500. Turbotax 2009 This plan also has an individual deductible of $2,000 for each family member. Turbotax 2009 The plan does not qualify as an HDHP because the deductible for an individual family member is less than the minimum annual deductible ($4,300) for family coverage. Turbotax 2009 Other health coverage. Turbotax 2009   You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not an HDHP. Turbotax 2009 However, you can still be an eligible individual even if your spouse has non-HDHP coverage provided you are not covered by that plan. Turbotax 2009 However, you can have additional insurance that provides benefits only for the following items. Turbotax 2009 Liabilities incurred under workers' compensation laws, torts, or ownership or use of property. Turbotax 2009 A specific disease or illness. Turbotax 2009 A fixed amount per day (or other period) of hospitalization. Turbotax 2009 You can also have coverage (whether provided through insurance or otherwise) for the following items. Turbotax 2009 Accidents. Turbotax 2009 Disability. Turbotax 2009 Dental care. Turbotax 2009 Vision care. Turbotax 2009 Long-term care. Turbotax 2009 Contributions to an MSA Contributions to an Archer MSA must be made in cash. Turbotax 2009 You cannot contribute stock or other property to an Archer MSA. Turbotax 2009 Who can contribute to my Archer MSA?   If you are an employee, your employer may make contributions to your Archer MSA. Turbotax 2009 (You do not pay tax on these contributions. Turbotax 2009 ) If your employer does not make contributions to your Archer MSA, or you are self-employed, you can make your own contributions to your Archer MSA. Turbotax 2009 Both you and your employer cannot make contributions to your Archer MSA in the same year. Turbotax 2009 You do not have to make contributions to your Archer MSA every year. Turbotax 2009    If your spouse is covered by your HDHP and an excludable amount is contributed by your spouse's employer to an Archer MSA belonging to your spouse, you cannot make contributions to your own Archer MSA that year. Turbotax 2009 Limits There are two limits on the amount you or your employer can contribute to your Archer MSA: The annual deductible limit. Turbotax 2009 An income limit. Turbotax 2009 Annual deductible limit. Turbotax 2009   You (or your employer) can contribute up to 75% of the annual deductible of your HDHP (65% if you have a self-only plan) to your Archer MSA. Turbotax 2009 You must have the HDHP all year to contribute the full amount. Turbotax 2009 If you do not qualify to contribute the full amount for the year, determine your annual deductible limit by using the worksheet in the Instructions for Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Turbotax 2009 Example 1. Turbotax 2009 You have an HDHP for your family all year in 2013. Turbotax 2009 The annual deductible is $5,000. Turbotax 2009 You can contribute up to $3,750 ($5,000 × 75%) to your Archer MSA for the year. Turbotax 2009 Example 2. Turbotax 2009 You have an HDHP for your family for the entire months of July through December 2013 (6 months). Turbotax 2009 The annual deductible is $5,000. Turbotax 2009 You can contribute up to $1,875 ($5,000 × 75% ÷ 12 × 6) to your Archer MSA for the year. Turbotax 2009 If you and your spouse each have a family plan, you are treated as having family coverage with the lower annual deductible of the two health plans. Turbotax 2009 The contribution limit is split equally between you unless you agree on a different division. Turbotax 2009 Income limit. Turbotax 2009   You cannot contribute more than you earned for the year from the employer through whom you have your HDHP. Turbotax 2009   If you are self-employed, you cannot contribute more than your net self-employment income. Turbotax 2009 This is your income from self-employment minus expenses (including the deductible part of self-employment tax). Turbotax 2009 Example 1. Turbotax 2009 Noah Paul earned $25,000 from ABC Company in 2013. Turbotax 2009 Through ABC, he had an HDHP for his family for the entire year. Turbotax 2009 The annual deductible was $5,000. Turbotax 2009 He can contribute up to $3,750 to his Archer MSA (75% × $5,000). Turbotax 2009 He can contribute the full amount because he earned more than $3,750 at ABC. Turbotax 2009 Example 2. Turbotax 2009 Westley Lawrence is self-employed. Turbotax 2009 He had an HDHP for his family for the entire year in 2013. Turbotax 2009 The annual deductible was $5,000. Turbotax 2009 Based on the annual deductible, the maximum contribution to his Archer MSA would have been $3,750 (75% × $5,000). Turbotax 2009 However, after deducting his business expenses, Joe's net self-employment income is $2,500 for the year. Turbotax 2009 Therefore, he is limited to a contribution of $2,500. Turbotax 2009 Individuals enrolled in Medicare. Turbotax 2009   Beginning with the first month you are enrolled in Medicare, you cannot contribute to an Archer MSA. Turbotax 2009 However, you may be eligible for a Medicare Advantage MSA, discussed later. Turbotax 2009 When To Contribute You can make contributions to your Archer MSA for 2013 until April 15, 2014. Turbotax 2009 Reporting Contributions on Your Return Report all contributions to your Archer MSA on Form 8853 and file it with your Form 1040 or Form 1040NR. Turbotax 2009 You should include all contributions you, or your employer, made for 2013, including those made by April 15, 2014, that are designated for 2013. Turbotax 2009 You should receive Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, from the trustee showing the amount you (or your employer) contributed during the year. Turbotax 2009 Your employer's contributions should be shown in box 12 of Form W-2, Wage and Tax Statement, with code R. Turbotax 2009 Follow the instructions for Form 8853 and complete the worksheet in the instructions. Turbotax 2009 Report your Archer MSA deduction on Form 1040 or Form 1040NR. Turbotax 2009 Excess contributions. Turbotax 2009   You will have excess contributions if the contributions to your Archer MSA for the year are greater than the limits discussed earlier. Turbotax 2009 Excess contributions are not deductible. Turbotax 2009 Excess contributions made by your employer are included in your gross income. Turbotax 2009 If the excess contribution is not included in box 1 of Form W-2, you must report the excess as “Other income” on your tax return. Turbotax 2009   Generally, you must pay a 6% excise tax on excess contributions. Turbotax 2009 See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. Turbotax 2009 The excise tax applies to each tax year the excess contribution remains in the account. Turbotax 2009   You may withdraw some or all of the excess contributions and not pay the excise tax on the amount withdrawn if you meet the following conditions. Turbotax 2009 You withdraw the excess contributions by the due date, including extensions, of your tax return. Turbotax 2009 You withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings. Turbotax 2009 Deducting an excess contribution in a later year. Turbotax 2009   You may be able to deduct excess contributions for previous years that are still in your Archer MSA. Turbotax 2009 The excess contribution you can deduct in the current year is the lesser of the following two amounts. Turbotax 2009 Your maximum Archer MSA contribution limit for the year minus any amounts contributed to your Archer MSA for the year. Turbotax 2009 The total excess contributions in your Archer MSA at the beginning of the year. Turbotax 2009   Any excess contributions remaining at the end of a tax year are subject to the excise tax. Turbotax 2009 See Form 5329. Turbotax 2009 Distributions From an MSA You will generally pay medical expenses during the year without being reimbursed by your HDHP until you reach the annual deductible for the plan. Turbotax 2009 When you pay medical expenses during the year that are not reimbursed by your HDHP, you can ask the trustee of your Archer MSA to send you a distribution from your Archer MSA. Turbotax 2009 You can receive tax-free distributions from your Archer MSA to pay for qualified medical expenses (discussed later). Turbotax 2009 If you receive distributions for other reasons, the amount will be subject to income tax and may be subject to an additional 20% tax as well. Turbotax 2009 You do not have to make withdrawals from your Archer MSA each year. Turbotax 2009 If you no longer qualify to make contributions, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses. Turbotax 2009 A distribution is money you get from your Archer MSA. Turbotax 2009 The trustee will report any distribution to you and the IRS on Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. Turbotax 2009 Qualified medical expenses. Turbotax 2009   Qualified medical expenses are those expenses that would generally qualify for the medical and dental expenses deduction. Turbotax 2009 These are explained in Publication 502. Turbotax 2009   Also, non-prescription medicines (other than insulin) are not considered qualified medical expenses for MSA purposes. Turbotax 2009 A medicine or drug will be a qualified medical expense for MSA purposes only if the medicine or drug: Requires a prescription, Is available without a prescription (an over-the-counter medicine or drug) and you get a prescription for it, or Is insulin. Turbotax 2009   Qualified medical expenses are those incurred by the following persons. Turbotax 2009 You and your spouse. Turbotax 2009 All dependents you claim on your tax return. Turbotax 2009 Any person you could have claimed as a dependent on your return except that: The person filed a joint return, The person had gross income of $3,900 or more, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Turbotax 2009    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. Turbotax 2009    You cannot deduct qualified medical expenses as an itemized deduction on Schedule A (Form 1040) that are equal to the tax-free distribution from your Archer MSA. Turbotax 2009 Special rules for insurance premiums. Turbotax 2009   Generally, you cannot treat insurance premiums as qualified medical expenses for Archer MSAs. Turbotax 2009 You can, however, treat premiums for long-term care coverage, health care coverage while you receive unemployment benefits, or health care continuation coverage required under any federal law as qualified medical expenses for Archer MSAs. Turbotax 2009 Health coverage tax credit. Turbotax 2009   You cannot claim this credit for premiums that you pay with a tax-free distribution from your Archer MSA. Turbotax 2009 See Publication 502 for information on this credit. Turbotax 2009 Deemed distributions from Archer MSAs. Turbotax 2009   The following situations result in deemed taxable distributions from your Archer MSA. Turbotax 2009 You engaged in any transaction prohibited by section 4975 with respect to any of your Archer MSAs at any time in 2013. Turbotax 2009 Your account ceases to be an Archer MSA as of January 1, 2013, and you must include the fair market value of all assets in the account as of January 1, 2013, on Form 8853. Turbotax 2009 You used any portion of any of your Archer MSAs as security for a loan at any time in 2013. Turbotax 2009 You must include the fair market value of the assets used as security for the loan as income on Form 1040 or Form 1040NR. Turbotax 2009   Examples of prohibited transactions include the direct or indirect: Sale, exchange, or leasing of property between you and the Archer MSA, Lending of money between you and the Archer MSA, Furnishing goods, services, or facilities between you and the Archer MSA, and Transfer to or use by you, or for your benefit, of any assets of the Archer MSA. Turbotax 2009   Any deemed distribution will not be treated as used to pay qualified medical expenses. Turbotax 2009 These distributions are included in your income and are subject to the additional 20% tax, discussed later. Turbotax 2009 Recordkeeping. Turbotax 2009 You must keep records sufficient to show that: The distributions were exclusively to pay or reimburse qualified medical expenses, The qualified medical expenses had not been previously paid or reimbursed from another source, and The medical expenses had not been taken as an itemized deduction in any year. Turbotax 2009 Do not send these records with your tax return. Turbotax 2009 Keep them with your tax records. Turbotax 2009 Reporting Distributions on Your Return How you report your distributions depends on whether or not you use the distribution for qualified medical expenses (defined earlier). Turbotax 2009 If you use a distribution from your Archer MSA for qualified medical expenses, you do not pay tax on the distribution but you have to report the distribution on Form 8853. Turbotax 2009 Follow the instructions for the form and file it with your Form 1040 or Form 1040NR. Turbotax 2009 If you do not use a distribution from your Archer MSA for qualified medical expenses, you must pay tax on the distribution. Turbotax 2009 Report the amount on Form 8853 and file it with your Form 1040 or Form 1040NR. Turbotax 2009 You may have to pay an additional 20% tax, discussed later, on your taxable distribution. Turbotax 2009 If an amount (other than a rollover) is contributed to your Archer MSA this year (by you or your employer), you also must report and pay tax on a distribution you receive from your Archer MSA this year that is used to pay medical expenses of someone who is not covered by an HDHP, or is also covered by another health plan that is not an HDHP, at the time the expenses are incurred. Turbotax 2009 Rollovers. Turbotax 2009   Generally, any distribution from an Archer MSA that you roll over into another Archer MSA or an HSA is not taxable if you complete the rollover within 60 days. Turbotax 2009 An Archer MSA and an HSA can only receive one rollover contribution during a 1-year period. Turbotax 2009 See the Form 8853 instructions for more information. Turbotax 2009 Additional tax. Turbotax 2009   There is a 20% additional tax on the part of your distributions not used for qualified medical expenses. Turbotax 2009 Figure the tax on Form 8853 and file it with your Form 1040 or Form 1040NR. Turbotax 2009 Report the additional tax in the total on Form 1040 or Form 1040NR. Turbotax 2009 Exceptions. Turbotax 2009   There is no additional tax on distributions made after the date you are disabled, reach age 65, or die. Turbotax 2009 Balance in an Archer MSA An Archer MSA is generally exempt from tax. Turbotax 2009 You are permitted to take a distribution from your Archer MSA at any time; however, only those amounts used exclusively to pay for qualified medical expenses are tax free. Turbotax 2009 Amounts that remain at the end of the year are generally carried over to the next year (see Excess contributions , earlier). Turbotax 2009 Earnings on amounts in an Archer MSA are not included in your income while held in the Archer MSA. Turbotax 2009 Death of the Archer MSA Holder You should choose a beneficiary when you set up your Archer MSA. Turbotax 2009 What happens to that Archer MSA when you die depends on whom you designate as the beneficiary. Turbotax 2009 Spouse is the designated beneficiary. Turbotax 2009   If your spouse is the designated beneficiary of your Archer MSA, it will be treated as your spouse's Archer MSA after your death. Turbotax 2009 Spouse is not the designated beneficiary. Turbotax 2009   If your spouse is not the designated beneficiary of your Archer MSA: The account stops being an Archer MSA, and The fair market value of the Archer MSA becomes taxable to the beneficiary in the year in which you die. Turbotax 2009   If your estate is the beneficiary, the fair market value of the Archer MSA will be included on your final income tax return. Turbotax 2009 The amount taxable to a beneficiary other than the estate is reduced by any qualified medical expenses for the decedent that are paid by the beneficiary within 1 year after the date of death. Turbotax 2009 Filing Form 8853 You must file Form 8853 with your Form 1040 or Form 1040NR if you (or your spouse, if married filing a joint return) had any activity in your Archer MSA during the year. Turbotax 2009 You must file the form even if only your employer or your spouse's employer made contributions to the Archer MSA. Turbotax 2009 If, during the tax year, you are the beneficiary of two or more Archer MSAs or you are a beneficiary of an Archer MSA and you have your own Archer MSA, you must complete a separate Form 8853 for each MSA. Turbotax 2009 Enter “statement” at the top of each Form 8853 and complete the form as instructed. Turbotax 2009 Next, complete a controlling Form 8853 combining the amounts shown on each of the statement Forms 8853. Turbotax 2009 Attach the statements to your tax return after the controlling Form 8853. Turbotax 2009 Employer Participation This section contains the rules that employers must follow if they decide to make Archer MSAs available to their employees. Turbotax 2009 Unlike the previous discussions, “you” refers to the employer and not to the employee. Turbotax 2009 Health plan. Turbotax 2009   If you want your employees to be able to have an Archer MSA, you must make an HDHP available to them. Turbotax 2009 You can provide no additional coverage other than those exceptions listed previously under Other health coverage . Turbotax 2009 Contributions. Turbotax 2009   You can make contributions to your employees' Archer MSAs. Turbotax 2009 You deduct the contributions on the “Employee benefit programs” line of your business income tax return for the year in which you make the contributions. Turbotax 2009 If you are filing Form 1040, Schedule C, this is Part II, line 14. Turbotax 2009 Comparable contributions. Turbotax 2009   If you decide to make contributions, you must make comparable contributions to all comparable participating employees' Archer MSAs. Turbotax 2009 Your contributions are comparable if they are either: The same amount, or The same percentage of the annual deductible limit under the HDHP covering the employees. Turbotax 2009 Comparable participating employees. Turbotax 2009   Comparable participating employees: Are covered by your HDHP and are eligible to establish an Archer MSA, Have the same category of coverage (either self-only or family coverage), and Have the same category of employment (either part-time or full-time). Turbotax 2009 Excise tax. Turbotax 2009   If you made contributions to your employees' Archer MSAs that were not comparable, you must pay an excise tax of 35% of the amount you contributed. Turbotax 2009 Employment taxes. Turbotax 2009   Amounts you contribute to your employees' Archer MSAs are generally not subject to employment taxes. Turbotax 2009 You must report the contributions in box 12 of the Form W-2 you file for each employee. Turbotax 2009 Enter code “R” in box 12. Turbotax 2009 Medicare Advantage MSAs A Medicare Advantage MSA is an Archer MSA designated by Medicare to be used solely to pay the qualified medical expenses of the account holder. Turbotax 2009 To be eligible for a Medicare Advantage MSA, you must be enrolled in Medicare and have a high deductible health plan (HDHP) that meets the Medicare guidelines. Turbotax 2009 A Medicare Advantage MSA is a tax-exempt trust or custodial savings account that you set up with a financial institution (such as a bank or an insurance company) in which the Medicare program can deposit money for qualified medical expenses. Turbotax 2009 The money in your account is not taxed if it is used for qualified medical expenses, and it may earn interest or dividends. Turbotax 2009 An HDHP is a special health insurance policy that has a high deductible. Turbotax 2009 You choose the policy you want to use as part of your Medicare Advantage MSA plan. Turbotax 2009 However, the policy must be approved by the Medicare program. Turbotax 2009 Medicare Advantage MSAs are administered through the federal Medicare program. Turbotax 2009 You can get information by calling 1-800-Medicare (1-800-633-4227) or through the Internet at www. Turbotax 2009 medicare. Turbotax 2009 gov. Turbotax 2009 Note. Turbotax 2009 You must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your tax return if you have a Medicare Advantage MSA. Turbotax 2009 Flexible Spending Arrangements (FSAs) A health flexible spending arrangement (FSA) allows employees to be reimbursed for medical expenses. Turbotax 2009 FSAs are usually funded through voluntary salary reduction agreements with your employer. Turbotax 2009 No employment or federal income taxes are deducted from your contribution. Turbotax 2009 The employer may also contribute. Turbotax 2009 Note. Turbotax 2009 Unlike HSAs or Archer MSAs which must be reported on Form 1040 or Form 1040NR, there are no reporting requirements for FSAs on your income tax return. Turbotax 2009 For information on the interaction between a health FSA and an HSA, see Other employee health plans under Qualifying for an HSA, earlier. Turbotax 2009 What are the benefits of an FSA?   You may enjoy several benefits from having an FSA. Turbotax 2009 Contributions made by your employer can be excluded from your gross income. Turbotax 2009 No employment or federal income taxes are deducted from the contributions. Turbotax 2009 Withdrawals may be tax free if you pay qualified medical expenses. Turbotax 2009 See Qualified medical expenses , later. Turbotax 2009 You can withdraw funds from the account to pay qualified medical expenses even if you have not yet placed the funds in the account. Turbotax 2009 Qualifying for an FSA Health FSAs are employer-established benefit plans. Turbotax 2009 These may be offered in conjunction with other employer-provided benefits as part of a cafeteria plan. Turbotax 2009 Employers have complete flexibility to offer various combinations of benefits in designing their plan. Turbotax 2009 You do not have to be covered under any other health care plan to participate. Turbotax 2009 Self-employed persons are not eligible for an FSA. Turbotax 2009 Certain limitations may apply if you are a highly compensated participant or a key employee. Turbotax 2009 Contributions to an FSA You contribute to your FSA by electing an amount to be voluntarily withheld from your pay by your employer. Turbotax 2009 This is sometimes called a salary reduction agreement. Turbotax 2009 The employer may also contribute to your FSA if specified in the plan. Turbotax 2009 You do not pay federal income tax or employment taxes on the salary you contribute or the amounts your employer contributes to the FSA. Turbotax 2009 However, contributions made by your employer to provide coverage for long-term care insurance must be included in income. Turbotax 2009 When To Contribute At the
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Understanding Your CP53A Notice

We tried to direct deposit your refund, but the financial institution couldn’t process it. We are researching your account, but it will take 8 to 10 weeks to reissue your refund.


What you need to do

  • If you don’t receive your refund check or a follow-up letter within 10 weeks, call us at 1-866-682-7451 x733.
  • If you call us before then, we won’t have any information about the status of your refund until we complete the research on your account.

Answers to Common Questions

Why was my direct deposit refund returned to the IRS?
A financial institution will reject a refund for a variety of reasons. Most often, one of the following items doesn’t match its records:

  • Name
  • SSN
  • Routing number
  • Account number

Why will it take up to 10 weeks to receive my refund?
We must research your account to determine if you are entitled to the refund. We try to balance customer service and tax compliance by reviewing tax returns to prevent fraudulent or erroneous refunds. However, these critical reviews add time to refund processing. Refund timeframes are also affected by:

  • Bankruptcy
  • An open audit
  • A balance due on a related account (such as a different tax year)

Will calling the IRS give me additional information or speed my refund?
No, calling the IRS won’t do anything to speed your refund. You don’t need to call us unless we ask you to. If we need more information to process your refund, we’ll contact you by mail. Our telephone assistors won’t be able to provide any additional information.

Is the estimated date my tax preparer, tax software, or “Where’s My Refund” provided a guarantee of when I’ll get my refund?
Unfortunately, we can’t guarantee the date when a taxpayer will get his or her refund. While we can provide an estimate, this is a “best-case scenario” where the tax return doesn’t require any additional review or corrections.We work hard to issue refunds as quickly as possible. However, you shouldn’t make major financial decisions based on the estimated issue date of a tax refund.

Can I direct part of my refund into my tax professional’s checking or savings account to pay my tax preparation fee?
No. You can direct your refund to any of your checking or savings accounts. You can’t direct your refund to someone else’s account (except for your spouse’s account when you have a joint refund).


Tips for next year

If you request a direct deposit refund, ensure the account you specify is in your name (or your spouse’s if you have a joint refund).

Page Last Reviewed or Updated: 04-Mar-2014

Printable samples of this notice (PDF)

 

 

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Turbotax 2009

Turbotax 2009 11. Turbotax 2009   Patient-Centered Outcomes Research Fee Table of Contents The patient-centered outcomes research fee is imposed on issuers of specified health insurance policies (section 4375) and plan sponsors of applicable self-insured health plans (section 4376) for policy and plan years ending on or after October 1, 2012. Turbotax 2009 Generally, references to taxes on Form 720 include this fee. Turbotax 2009 Specified health insurance policies. Turbotax 2009   For issuers of specified health insurance policies, the fee for a policy year ending before October 1, 2013, is $1. Turbotax 2009 00, multiplied by the average number of lives covered under the policy for that policy year. Turbotax 2009 Generally, issuers of specified health insurance polices must use one of the following four alternative methods to determine the average number of lives covered under a policy for the policy year. Turbotax 2009 The actual count method. Turbotax 2009 For policy years that end on or after October 1, 2012, issuers using the actual count method may begin counting lives covered under a policy as of May 14, 2012, rather than the first day of the policy year, and divide by the appropriate number of days remaining in the policy year. Turbotax 2009 The snapshot method. Turbotax 2009 For policy years that end on or after October 1, 2012, but that began before May 14, 2012, issuers using the snapshot method may use counts from quarters beginning on or after May 14, 2012, to determine the average number of lives covered under the policy. Turbotax 2009 The member months method. Turbotax 2009 And, 4. Turbotax 2009 The state form method. Turbotax 2009 The member months data and the data reported on state forms are based on the calendar year. Turbotax 2009 To adjust for 2012, issuers will use a pro rata approach for calculating the average number of lives covered using the member months method or the state form method for 2012. Turbotax 2009 For example, issuers using the member months number for 2012 will divide the member months number by 12 and multiply the resulting number by one quarter to arrive at the average number of lives covered for October through December 2012. Turbotax 2009 Applicable self-insured health plans. Turbotax 2009   For plan sponsors of applicable self-insured health plans, the fee for a plan year ending on or after October 1, 2012, and ending before October 1, 2013 is $1. Turbotax 2009 00, multiplied by the average number of lives covered under the plan for that plan year. Turbotax 2009 Generally, plan sponsors of applicable self-insured health plans must use one of the following three alternative methods to determine the average number of lives covered under a plan for the plan year. Turbotax 2009 Actual count method. Turbotax 2009 Snapshot method. Turbotax 2009 Form 5500 method. Turbotax 2009 However, for plan years beginning before July 11, 2012, and ending on or after October 1, 2012, plan sponsors may determine the average number of lives covered under the plan for the plan year using any reasonable method. Turbotax 2009 Reporting and paying the fee. Turbotax 2009   File Form 720 annually to report and pay the fee on the second quarter Form 720, no later than July 31 of the calendar year immediately following the last day of the policy year or plan year to which the fee applies. Turbotax 2009 If you file Form 720 only to report the fee, do not file Form 720 for the 1st, 3rd, or 4th quarters of the year. Turbotax 2009 If you file Form 720 to report quarterly excise tax liability for the 1st, 3rd, or 4th quarter of the year (for example, filers reporting the foreign insurance tax (IRS No. Turbotax 2009 30)), do not make an entry on the line for IRS No. Turbotax 2009 133 on those filings. Turbotax 2009   Deposits are not required for this fee, so issuers and plan sponsors are not required to pay the fee using Electronic Federal Tax Payment System (EFTPS). Turbotax 2009   However, if the fee is paid using EFTPS, the payment should be applied to the second quarter. Turbotax 2009 See Electronic deposit requirement under How To Make Deposits in chapter 13, later. Turbotax 2009 More information. Turbotax 2009   For more information, including methods for calculating the average number of lives covered, see sections 4375, 4376, and 4377; also see T. Turbotax 2009 D. Turbotax 2009 9602, which is on page 746 of I. Turbotax 2009 R. Turbotax 2009 B. Turbotax 2009 2012-52 at www. Turbotax 2009 irs. Turbotax 2009 gov/pub/irs-irbs/irb12-52. Turbotax 2009 pdf. Turbotax 2009 Prev  Up  Next   Home   More Online Publications