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Tax Benefits of Health Savings Accounts 
 
by kmhagen August 15, 2005

Reporting HSA Contributions

You can make contributions to your HSA at any time during the applicable tax year, and until the due date for filing your tax return for the year (April 15th of the following year).  Contributions are reported on Form 8889.  You should receive Form 5498-SA, HSA, Archer MSA, or Medicare+Choice MSA Information, from the trustee of the account, showing the amount contributed to your HSA during the year.  Any contributions your employer makes to your HSA should be reported in box 12 of your Form W-2, with code W.

Excess Contributions

Any amounts you contribute that exceed the maximum amount allowable are not deductible.  Excess contributions by your employer should be included in your gross wages.  If they are not included in box 1 of your W-2 as wages, you should report the excess contributions as Other Income on Form 1040.

Excise Tax 

Generally, you will have to pay a 6% excise tax on the excess contributions.  This tax is reported on Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts.  You can avoid this excise tax by withdrawing the excess contributions and reporting any earnings on them in Other Income on your tax return.

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