HSA Question client in office now

[ljwalters]

Client oppened HSA account Jan of 2011. Made deposit of $3050 in Jan 2012 and then withdrew $3000 for 2011 medical bills she paid out of pocket. I know the deposit can count for 2011 but can the withdrawl also count for 2011 or does it need to be on the 2012 return?

Linda

[Pacun]

For matching purposes, you might want to wait the form from the bank stating the amount of the distribution.

[Cathy]

Linda,

$3,050 is the maximum 2011 contribution for an individual (under age 50). My only concern would be to make sure the account was legally established in January of 2011. Did she make a deposit in January of 2011? If not, you might need to research was constitutes "establishing a HSA prior to incurring medical expenses".

My HSA has been established for years and I usually make my contributions for the current year durig tax season. Last year I didn't, however, I just made my 2011 contribution in March of 2012 and I will be able to reimburse myself for my 2011 expenses and then turn around and use the same money to fund my 2012 contribution.

The key to your question is whether or not the HSA was properly established in Jan. of 2011. I was under the impression that a deposit to the account had to be made in order to establish one, but I could be wrong. IRS.gov will probably have your answer.

Cathy

[Cathy]

Linda,

Also, the withdrawal will be reported on her 2012 return as it was withdrawn in 2012. Unless her account was properly established in 2011, her deposit would be considered a 2012 deposit. Need to do some research for sure before you show a HSA deposit on her 2011 return.

Cathy