The HSA Deduction

Today TaxMama® hears from Front9532 in the TaxQuips Forum, who wants to clear up something confusing. “Both my wife and I have Health Savings Accounts (HSA accounts). In 2012 our health insurance plan qualified as a High Deductible Family Health Plan. I am ineligible to make a contribution to my plan since I am over 65. My wife turned 65 in July 2012. I’d like to know, what is the maximum contribution my wife can make to her HSA in 2012?”

 

                        

Ok Front,

Let’s see how this works, going through the steps logically.

YOU cannot contribute at all, you say. All right. Your wife will get the extra contribution – but she can only contribute for 7 months. (Being eligible on the first day of July lets her have that month as well – unless her birthday is the first of July?)

So, let’s see what the instructions to Form 8889 say.  Note: The last month rule is – if you are eligible on the first day of December (or your tax year), you are an eligible individual for the entire year.  That rule does not apply to your wife.

So…she gets to deduct 7/12 of $6150 = $3588

Plus 7/12 of $1000 = $583, for a total of $4,171

Normally, I would not run these numbers for you.  That’s what tax software is for. But, I was curious to see how this would work out – so you’re in luck. Oddly enough, it turns out to be a logical computation.

And remember, you can find answers to all kinds of questions about special tax benefits and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

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