how much of capital gain I can to HSA if I have capital loss carryover?

[Ventura]

I am pre-retired, has no salary income, no social security, no annuity. The only income is from my investment.  I have some capital gain in this year (2020), I want to contribute to my HSA, I have family HDHP, so I know I am qualify  to contribute to HSA. IF I have capital gain $6000 in 2020, and capital loss carryover amount $2000 from 2019. My question is how to handle the capital loss carryover so I can contribute all $6000 to HSA?

[Bsch4477]

The $6000 profit from your stock sale can be used for your HSA contribution. The $2000 carry over loss will be offset against that gain for tax purposes.  Since you have no tax liability your HSA deduction will not help you in terms of any tax savings. 

[Ventura]

Hi,

I forgot mention something, I have distribution from my IRA account, so I need pay tax. Can I still contribute all $6000 to HSA?

[Bsch4477]

Yes. The limit for the family plan is $7,200 for 2021. 

[NCperson]

just to clarify - because there appears to be fixation on the $6000...

there will be capital gains on $4000 as the capital loss of $2000 will be netted against the capital gain of $6,000 to yield $4000.  

But there may not be any tax to pay in any event - depends on how much that IRA distribution is net of your standard deduction. 

It is possible that the capital gains rate is 0% in any event; hard to know with the limited details you provided. 

[Ventura]

I have IRA distribution, is $48,000 in 2020,  capital gain is $6,000, so I need pay some tax for the income. I want to know the carryover capital loss from previous year (2019) can offset which portion of my income? Because I want to contribute max amount to my HSA.

As I know, the carryover loss can can be deducted from my income even there is no capital gain, am I correct?

[NCperson]

You stated there is capital gains.  The loss MUST be netted against that gain.  You don't have the option to report the capital gain and hold the loss over to another year. Nor do you have the option of reporting the $6000 capital gain and using the loss to reduce the ordinary income from $48,000 to $46,000. 

I suspect there is a spouse with income involved since you stated it's a family plan but you are not working.  

The max amount is dependent on your age and your spouse's age....it's $7100 for a family but each of you (if there are separate HSAs) can add $1000 to each HSA if each of you are older than 55.  

You appear to be really focused on the capital gain as thinking it somehow limits the contribution, but it doesn't.  

Can I make a suggestion?  Using either TT 2019 or TT2020 (download version), just drop your numbers into the program and see what results.  2019 is going to be close (tax will be a little higher) as none of the rules involved here changed from 2019 to 2020.  

[Ventura]

I tried those number in TT2019 with HSA contribution $4000 and $6000. Different tax amount as expected. 

In TT review, both two contribution number passed the review, no error show up.

So I am confused, how much I can contribute to HSA?

[Bsch4477]

That was explained by @NCperson

[Mike9241]

several questions you did not answer so I will make some assumptions  - neither you nor your spouse is cover by medicare and neither are over 65. the $6K in capital gains is long-term

with a fully taxable ira of $48K net long-term capital gains of $4k a standard deduction for 2020 of about $25K

your taxable income would be $27K.   

so here's the max HSA you can make for 2020

if both are under 55 years old then $7100. if you are over 55 you can contribute an extra $1000. if your spouse is over 55 she can contribute $1,000 but it must be to her HSA - there are no joint HSA's

if both over 55 then an extra  $1000 to yours and $1000 to hers. thus the max  for both $9100 

if the capital gains are long-term the tax on them will be $0 what the HSA does is reduce the other taxable income.  so a $6000 HSA would reduce taxable income to $21K of which $4K doesn't get taxed (the LTCG) so you end up paying tax on $17K.  if the $6K in capital gains was short-term then all $21K is taxed 

[NCperson]

@Mike9241 -

this was the original question: 

"My question is how to handle the capital loss carryover so I can contribute all $6000 to HSA?"

the bottom line to the original question is that the HSA limit is as you stated ($7100 if under 55 etc) and the capital gains is not going to limit the HSA.   one simply doesn't have anything to do with the other.

[Mike9241]

you did not understand what I previously posted. the capital loss carryover and current year capital gain are netted, they have no effect on an HSA contribution.  you can contribute to your HSA up to the maximum I've previously posted.   you can contribute to your HSA $1 or $6000 and your return will still show a net capital gain of $4000 on line 7. the HSA deduction will show up on form 1040 line 10a and on schedule 1 on line 12      

[NCperson]

@Mike9241 - if that was directed at me, yes I did.