HSA contributions for 2023

[raidengl]

My wife got a new job in August and aquired an HSA at that time. TT said that she over contributed and that we need to withdraw before April or get penalized.

What would be the contribution limits for that short of an HSA period?

[BillM223]

First, what type of High Deductible Health Plan did she (or you both) have? Self or Family? NOTE: this is the type of policy, not your filing status. 

The annual HSA contribution limit for Self-only is $3,850; the annual HSA contribution limit for Family is $7,750. If your wife is 55+ then there is an increase of up to $1,000 a year in the limit.

She is covered by her HDHP policy for any month in which she was covered on the first day of the month. Thus, to be covered by August, she needed to be covered by August 1st, otherwise, her coverage started in September.

The HSA annual contribution limit is prorated by month. So take the appropriate annual coverage for Self-only or Family, then multiply by the number of months she was actually covered and divide by 12 - and this will give you her annual HSA contribution limit for 2023.

You should be able to reproduce this by subtracting her contributions from the limit you just calculated.

[raidengl]

• Thanks I found the answer but didn't delete the post before you answered.

[Mike9241]

Under the last-month rule(LMR), you are considered to be an eligible individual for the entire year if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers)
and you meet certain other requirements. If you meet these requirements, you are an eligible individual
even if your spouse has non-HDHP family coverage, provided your spouse’s coverage doesn’t cover you.

However, if you use the LMR you must remain eligible through 12/31/2024 see IRS PUB 969 starting on page 6

there is no requirement to use the LMR in which her eligible contributions are prorated for the year 

https://www.irs.gov/forms-pubs/about-publication-969