Can you tell me how the amount on item #3 of form 8889 is calculated?

[BMcCalpin · Accepted solution]

If you are speaking of line 3 on the 8889, it is the annual HSA contribution limit that you are allowed in the current year (2017).

The worksheet that goes with line 3 lists all twelve months and shows the type of HDHP (your health insurance) coverage for each month. For those under age 55, the entries for each month will be $6,750 (Family), $3,400 (Self-only), or $0 (None).

Then these numbers are added up and the total divided by 12, to get the annual contribution limit.

Someone who was on a Self-only plan for 6 months, then went on a Family plan for 6 months would show the following: 6 months at 3,400 and 6 months at 6,750 for a total of 60,900; divided by 12 gives you an annual limit of 5,075.

If you are 55 or over, there is a $1,000 bonus to your limit; this is why you are told to see the instructions for how to enter.

[Edited 3/26/2020 1:25 pm CDT - typos]