pphilly
New Member

Deductions & credits

Thanks, do you mean it would have been $4200 in "excluded" benefits for 2017 (line 25) rather than taxable? That's where the difference went to last year. Line 26 was $0. Then for 2018, the grace period ammt ($800) ends up as taxable benefits (line 26) and excluded benefits (line 25) stays at $5000. So, basically, the IRS penalizes you for using funds in the grace period by taking the tax deduction for 2017  back from you in 2018 for all grace period funds you use if you also add the max $5000 to the account for 2018 - if i'm doing it right?