HSA Form 8889

[ljwalters]

Client has HSA account for several years and then changes jobs in august (mid month)

Facts she contributed thru payroll deductions 1400 before being laid off August 10tu 2008.

And then she took qualified disbursements of the entire 1400. HSA account now 0. It was an individual HSA

She is single with no dependents. 1400 reported on w2.

This should be simple.

Her allowable contributions should be 1933 she only contributed 1400 there for all allowable.

Her deductions were all qualifying, therefore no tax consequence except no counted as income.

Why is ATX taxing her on the 1400 and penalizing here.

If I fill out part III of form 8889 the taxable income is 3333 (the sum of the qualified limit and the actual contribution)

And the penalty of 333

This can't be right please help me figure this out.

Linda and Buddy

[JRS]

I could be wrong, but reading the instructions for part 3, I see no need to fill it out. On part 2, if I enter $1400 on line 14a, then $1400 on line 15, I get no penalty. She did use the distribution for "unreimbursed medical expenses" did't she?

[ljwalters]

Yes they were for unreiembursed medical. Thanks

[kcjenkins]

Part three is only used when the t/p stops being a qualified individual. It does not sound to me like that applies in this case. Read page 6 of the instuctions to be sure you need to use part III.