HSA- on non dependent child

[bgoodman1]

I recently had to switch my health insurance plan to an HSA, I'm able to cover both of my children under the health plan, but am wondering if I can use funds from the HSA for my son whom my ex claims on their taxes? We share 50/50 custody, he claims my son on his taxes and I claim our daughter on my taxes.

[Critter-3]

Yes you can.

[Anonymous]

an HSA is not an insurance plan. you must be covered by a HDHP and no disqualifying coverage such as an FSA or other non-high-deductible general coverage insurance. 

[Hal_Al]

Ask that question to the HSA plan administrator.  Usually the answer is yes. In taxes, you may claim medical expenses for yourself, your spouse, your dependents and your children that are claimed as a dependent by the other parent. 

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MORE TAX INFORMATION FOR SEPARATED PARENTS

 For tax purposes, there is no such thing as joint custody, regardless of what your legal agreement says. The requirement, to be custodial parent, is that the child live with you MORE than 50% of the time. One of you has to be the custodial parent and the other the non-custodial parent. The IRS goes by physical custody, not legal custody. 

The custodial parent has first priority on claiming the children on her taxes; regardless of the amount of support provided by the non-custodial parent. The IRS goes by physical custody, not legal custody. The non-custodial parent can only claim the child as a dependent if the custodial parent gives permission (on form 8332) or if it's spelled out in a pre 2009 divorce/custody decree. (without conditions - usually the payment of child support). Even if a divorce decree, dated after 2008, gives the non-custodial parent the right to claim the child, he must still get form 8332 from the custodial parent. A properly worded decree should require her to provide that form. https://www.irs.gov/pub/irs-pdf/f8332.pdf

There is a way to split the tax benefits.  This may be helpful in your negotiations with the ex:

 There is a special rule in the case of divorced & separated (including never married) parents. When the non-custodial parent is claiming the child as a dependent/exemption/child tax credit; the custodial parent is still allowed to claim the same child for Earned Income Credit, Head of Household filing status, and day care credit. This "splitting of the child" is not available to parents who lived together at any time during the last 6 months of the year; then only one of you can claim the child for any tax reasons. The tax benefits may not be split in any other manner.

Note in particular that the non-custodial parent can never claim the Earned Income Credit, Head of Household filing status or the day care credit, based on that child, even when the custodial parent has released the dependency to him.

 So, it's good idea to let the other parent know that you will be claiming those items, as many first time divorced parents are not aware of this rule and may try to claim those items, which will cause the IRS to send out letters.

Ref: https://www.irs.gov/publications/p17#en_US_2017_publink1000170897

Scroll down to "Children of divorced or separated parents (or parents who live apart)"

You can if you are the custodial parent.  The custodial  parent is the parent the child lived with for more than 182 nights in 2019.

[bgoodman1]

This is a Medical HSA plan

[bgoodman1]

I was trying to get clarification from HR at my job and this was the response I was given:

anyone can be covered under the Medical H S A Plan. IRS rules only allow you to use pre-tax H S A funds for tax dependents.  If you share custody or take turns claiming the child every other year, it’s possible that you can use the funds for your child.  You’ll want to talk to your tax preparer to get advice.

[Opus 17 · Accepted solution]

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@bgoodman1 wrote:

I was trying to get clarification from HR at my job and this was the response I was given:

anyone can be covered under the Medical H S A Plan. IRS rules only allow you to use pre-tax H S A funds for tax dependents.  If you share custody or take turns claiming the child every other year, it’s possible that you can use the funds for your child.  You’ll want to talk to your tax preparer to get advice.

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HR is incorrect as it applies to your case.  While they are generally correct that an HSA can only be used to pay for medical expenses for yourself, your spouse, and dependents you claim on your tax return, there are a couple of exceptions, including for children of divorced or separated parents. 

For this purpose, a child of parents that are divorced, separated, or living apart for the last 6 months of the calendar year is treated as the dependent of both parents whether or not the custodial parent releases the claim to the child’s exemption.

See bottom of page 9 and top of page 10.  https://www.irs.gov/pub/irs-pdf/p969.pdf