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Deductions & credits
Nope, I think you are confused.
Start by putting the lump sum of $6000+ into the account, then withdraw it to pay your medical bills. If you change nothing else, you will get a $1500 -larger refund in March than you would have gotten, because the $6000 deposit is a tax deduction. (It is not a tax deduction on form 1040 if you make payroll contributions, because it is already pre-tax and your W-2 will be lower instead.) Got it so far?
So now, you have a $1500 refund "in the bank" with the IRS. You can leave everything alone and collect it in March. Or, you can adjust your W-4 (not your W-2). Your W-4 is the form you file with your employer that calculate how much tax should be withheld each week. If you are married with two children you might claim 4 or 6 allowances, depending on if your spouse works and how old your children are. Claiming a certain number of allowances is a way of predicting how much tax you will owe so that it can be taken out in bi-weekly installments. If you raise the number of allowances by 3 from what it is now, that will result in you getting about $125 per paycheck extra in take-home pay. Over 10 pay periods left in the year that's $1250. That's not free money, it's reducing your tax refund. You can do it in this case since you have a $1500 refund "in the bank" thanks to the lump sum HSA contribution.
So changing your W-4 would be a way of getting that refund spread out over the last 10 pay periods of the year instead of waiting until March of next year.
If you do this, remember to change your W-4 back to normal in January, otherwise you will not pay enough withholding in 2017 and will owe at the end of the year.
(Your W-2 is just a report at the end of the year of all your wages and tax withholding.)
Start by putting the lump sum of $6000+ into the account, then withdraw it to pay your medical bills. If you change nothing else, you will get a $1500 -larger refund in March than you would have gotten, because the $6000 deposit is a tax deduction. (It is not a tax deduction on form 1040 if you make payroll contributions, because it is already pre-tax and your W-2 will be lower instead.) Got it so far?
So now, you have a $1500 refund "in the bank" with the IRS. You can leave everything alone and collect it in March. Or, you can adjust your W-4 (not your W-2). Your W-4 is the form you file with your employer that calculate how much tax should be withheld each week. If you are married with two children you might claim 4 or 6 allowances, depending on if your spouse works and how old your children are. Claiming a certain number of allowances is a way of predicting how much tax you will owe so that it can be taken out in bi-weekly installments. If you raise the number of allowances by 3 from what it is now, that will result in you getting about $125 per paycheck extra in take-home pay. Over 10 pay periods left in the year that's $1250. That's not free money, it's reducing your tax refund. You can do it in this case since you have a $1500 refund "in the bank" thanks to the lump sum HSA contribution.
So changing your W-4 would be a way of getting that refund spread out over the last 10 pay periods of the year instead of waiting until March of next year.
If you do this, remember to change your W-4 back to normal in January, otherwise you will not pay enough withholding in 2017 and will owe at the end of the year.
(Your W-2 is just a report at the end of the year of all your wages and tax withholding.)
May 31, 2019
5:48 PM