I contributed after-tax dollars to my HSA. Where do I report that and is it stilled taxed? I was not under a HDHP during this time.

[kabursch]

The walk through looks different than last year's: https://ttlc.intuit.com/questions/3168628-where-do-i-report-hsa-contributions-made-after-tax

[DanielV01 · Accepted solution]

You are correct.  Instead of typing in "HSA" you'll want to type in "Form 8889" and then click on Jump to Form 8889.,  This is the name of the form where you input the information.

Your after tax contribution to your HSA is not taxable unless you overfund your HSA (contribute more than what you are allowed to based on what type of HDHP plan, family or single, that you have and if you're allowed additional contribution for age).  Rather, it's deductible, in other words, it reduces the amount of your taxable income.

[kabursch]

Thank you so much for the quick reply!

[DanielV01]

Your welcome.

[himanshuag]

I've missed my contributions through pay checks. So, would like to make direct contribution to my HSA. I can claim this direct contribution as deductible during tax filing but will I save the taxes same way as I would have saved through paychecks? I heard that I won't be able to save FICA taxes. Is that correct?

[Critter-3]

I can claim this direct contribution as deductible during tax filing but will I save the taxes same way as I would have saved through paychecks?   If you are covered under a HDHP then you can make HSA contributions with after tax money and get an adjustment on your return. 

I heard that I won't be able to save FICA taxes. Is that correct?  That is correct, on your return you only save fed (and if allowed) state taxes. 

[DanielV01]

@himanshuag  In addition to @Critter-3 's response, if you were to have HSA contributions directly deducted and sent from your paycheck, you would still have to pay FICA on the pay before the remainder is contributed to your HSA.  You don't save FICA taxes either way.

[Critter-3]

@DanielV01 

I beg to differ ...  

The FICA tax is comprised of Social Security and Medicare taxes, and this combined tax is typically 15.3% (the Social Security tax is 12.4% on all wages up to $132,900, and the Medicare tax is 2.9% on all wages, with an additional 0.9% for employees with wages higher than $200,000). Employers and employees split the tax, so each typically pays 7.65%.

When you contribute to a 401(k) or IRA, those contributions are subject to FICA taxes, regardless of whether you have a traditional or Roth plan. With an HSA, though, you never have to pay FICA taxes on contributions done via payroll withholding through your employer’s Section 125 plan, and neither does your employer. For each HSA contribution, that’s an extra 7.65% back for you and for your employer!

Let’s break that down. If you contributed $500 each month to a 401(k), you’d have $6,000 in the account by the end of the year. If you contributed $500 each month to an HSA via payroll withholding, you’d have the same $6,000 in your account at year’s end. However, since you didn’t pay FICA taxes on those HSA contributions, you’d have an extra $460 in take-home pay by the end of the year. You can then contribute that extra $460 of annual FICA savings into your HSA; over 40 years, those FICA savings alone could grow to over $75,000*!

https://healthsavings.com/hsas-best-way-save-retirement/#:~:text=With%20an%20HSA%2C%20though%2C%20yo...!

[himanshuag]

Oh is it? I thought HSA contributions from paychecks do save payroll taxes. As mentioned here:

https://healthsavings.com/hsas-best-way-save-retirement/#:~:text=With%20an%20HSA%2C%20though%2C%20yo...!

[DanielV01]

@himanshuag @Critter-3  I appreciate the information.  I had never seen that strategy used before, so I appreciate the update.  I once had HSA deductions made on my own paycheck that were subject to FICA, but not through a Cafe-125 plan, so it did not have that tax savings attached to it.  If you make an HSA contribution after-tax, you can get a deduction from Federal but not FICA tax as already pointed out.  Thank you.

[himanshuag]

Thanks @DanielV01 @Critter-3 for the valuable information here. This really helped me to unblock on my decision. 

[Critter-3]

The employer has the option to do it either way however most will take advantage of the HSA pre tax benefit when they can ... goes the same with FSA contributions.  I maxed the FSA for 2 tax years to pay for dental work and it was nice to save on all taxes ... I had more to spend on crowns.