Discussion:MSA's and Archer MSA's
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Discussion Forum Index --> Tax Questions --> MSA's and Archer MSA's
| 7 March 2007 | |
| I am going crazy with this one. Taxpayer has worked 3 months for an employer who has a HSA plan. $2,000 annual deductible Employer contributed $500 and is in Box 12b coded W. TP put in another $300. Payouts for med exp were $382. Seems like this should be a $300 adjustment to income on line 25, 1040, but unless I fill out the 8853 Archer MSA form that doesn't flow there. However, I do not think the Employer plan is an Archer MSA. End result using the 8853 is no deduction and an $18 Fm 5329 penalty for excess contributions. HELP!!!! | |
| March 7, 2007 | |
| Forget filling out Form 8853, if this is an HSA. Fill out Form 8889, enter the deductible, the employee's contributions, whether it's a self or family plan, and # of months in the plan in 2006. In the W-2 worksheet, enter the $500 and code W. If there is a Form 1099-SA, fill out the SA worksheet, lines 1, 2, 3, and 5, partial or total amount used for medical expenses and any other applicable lines. On Form 5329, fill out the ending value on 12/31 of the HSA account in the HSA Value Smart Worksheet. | |
| 8 March 2007 | |
| I thought perhaps I lacked a basic understanding of what the $500 coded W in Box 12b is but the back of the W-2 says it is an employer contribution. I assume that means it a pretax contribution, i.e. that $500 is not reflected in Line 1 wages, as to that point it does not show up as a HSA adjustment to income.
The problem arises when I key in the additional $300 this taxpayer says she put into this plan in 2006. The deductible is $2,000, she was on the job 3 months, so the limitation ends up being $500. When I put that $300 on Line 2 of 8889, that $300 ends up on line 47 of Fm 5329 as an excess contribution with a $18 penalty. Maybe that's the right answer - the total pretax by employer and employee volutary additions cannot exceed this $500 - though she was told she could contribute additional amounts to the HSA. I was expecting a $300 adj to income on Line 25, Fm 1040. [If you make an excess contribution do you have to take it out?] | |
| 8 March 2007 | |
| Further to above - I guess it comes down to this - is the "limit" the total of employer and employee contributions, or is the limit separate, i.e. the amount of the deductible each. In a full year, can the employer contribute $2,000 AND the employee add $2,000 if the policy deductible is $2,000? | |
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