HSA/Medicare/Tax Deduction

[badger13]

I contributed to an HSA in 2021 from January through October while I was a part of a HDHP.  In November, I went on Medicare.  When I completed my tax form on Turbotax, it indicates my tax deduction is 0 for my HSA.  Why?  Do I have to be a part of an HDHP all 12 months in order for it to be deductible?

[DianeW777]

You are allowed to contribute for the months you qualify. 

• You can make contributions to your HSA for 2021 until April 15, 2022. If you fail to be an eligible individual during 2021, you can still make contributions until April 15, 2022, for the months you were an eligible individual.

When you make your HSA contribution entry be sure to select the months you were eligible and the months you received medicare.

• Where do I enter my HSA contributions in TurboTax?

[badger13]

Thank you.

Turbo Tax is telling me that, given my 10 months of participation in a HDHP, my max contribution for 2021 is $3,833.  My calculation is that the max contribution for 2021 is $3,500.

12 month contribution limit for 2021 is 3,200 + 1,000 catch up contribution.  Divide $4,200/12 months = $350.  $350 x 10 = annual limit of $3,500.

Which is correct?

[DianeW777]

The HSA contribution allowed is calculated by taking the contribution maximum annual limit, then prorate by the months you are eligible.

• 2021 Maximum limit for self only plans is $3,600 and $1,000 catchup for 55 and older

Our awesome Tax Champ @Opus 17 give a great example 

If you turn 65 during the month of November 2021, your Medicare coverage will start November 1, 2021.  That means you would have ten months of eligibility during 2021 to contribute to an HSA, so your contribution limit is 10/12 of $3,600 ($3,000) + 10/12 of the $1000 ($833) catch-up contribution amount for a total of $3,833.   It doesn’t matter when during the calendar year 2021 you actually make the contribution.  It’s the dollar amount that counts, not the exact date of the contribution, as long as the contribution occurs during the 2021 tax year.

[Opus 17]

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@badger13 wrote:

Thank you.

Turbo Tax is telling me that, given my 10 months of participation in a HDHP, my max contribution for 2021 is $3,833.  My calculation is that the max contribution for 2021 is $3,500.

12 month contribution limit for 2021 is 3,200 + 1,000 catch up contribution.  Divide $4,200/12 months = $350.  $350 x 10 = annual limit of $3,500.

Which is correct?

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It's $3600, not $3200.