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Irs Tax Form 1040ez

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Irs Tax Form 1040ez

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Understanding Your CP138 Notice

This notice tells you that all or part of the overpayment on a return you filed was applied to other federal taxes you owe.


What you need to do

  • Read your notice carefully. It will explain why we couldn't apply the amount you requested to next year's taxes. It also will suggest additional steps for you to take, depending on your situation.
  • If you requested the overpayment in question to be applied to another tax period, you will need to make an additional payment for that tax period.

You may want to

  • Download a copy of Publication 1, Your Rights as a Taxpayer (if it was not included with your notice).
  • Retain the notice for your records.
  • Review your records for the overpaid tax period and the tax period(s) to which it was applied.

Answers to Common Questions

Q. How can I find out what caused my overpayment to be reapplied?

A. Please contact us at the number listed on your notice for specific information concerning your tax return.

Q. What should I do if I disagree with the changes you made?

A. If you disagree, contact us at the toll-free number listed on the top right corner of your notice.

 

Page Last Reviewed or Updated: 10-Feb-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 Irs Tax Form 1040ez

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