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Amend 2011 Federal Return

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Amend 2011 Federal Return

Amend 2011 federal return Publication 15-T - Additional Material Table of Contents This image is too large to be displayed in the current screen. Amend 2011 federal return Please click the link to view the image. Amend 2011 federal return Form W-4 (2009) This image is too large to be displayed in the current screen. Amend 2011 federal return Please click the link to view the image. Amend 2011 federal return Deductions and Adjustments Worksheet Notice to Employees Please click here for the text description of the image. Amend 2011 federal return Multi-Media/Back Page Prev  Up  Next   Home   More Online Publications
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Understanding your CP21A Notice

We made the change(s) you requested to your tax return for the tax year specified on the notice. You owe money on your taxes as a result of the change(s).

Tax publications you may find useful

How to get help

Calling the toll free number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do

  • Read your notice carefully ― it will explain why you owe money on your taxes.
  • Pay the amount owed by the date on the notice's payment coupon.
  • Make payment arrangements if you can't pay the full amount you owe.
  • Contact us if you disagree with the change(s) we made.
  • Correct the copy of your tax return that you kept for your records.

You may want to...


Answers to Common Questions

The notice says "Based on the information you provided, we changed your 200X Form 1040 to correct your:..." but I don't remember sending any change to IRS. How can I find out what IRS received to initiate this change?
Please contact us at the number listed on the top right corner of your notice for specific information about your tax return.

What do I say when I call the IRS?
Mention that you got a CP21A notice with a balance due and you need to review your account with a customer service representative. Be sure to have a copy of your notice and your tax return before you call.

What should I do if I disagree with the changes you made?
If you disagree, contact us at the toll-free number listed on the top right corner of your notice.

What happens if I can't pay the full amount I owe?
You can arrange to make a payment plan with us if you can't pay the full amount you owe.

Am I charged interest on the money I owe?
If you don't full pay the amount you owe by the date on the payment coupon, interest will accrue on the unpaid balance after that date.

Will I receive a penalty if I can't pay the full amount?
Yes, you'll receive a late payment penalty. You can contact us at the number listed on your notice if you’re unable to pay the full amount shown in your specific notice because of circumstances beyond your control. Contact us by the due date of your payment and, depending on your situation, we may be able to remove the penalty.

Can I set up a payment plan?
Yes. Call the toll-free number listed on the top right corner of your notice to discuss payment options or check out more information on payment options and how to make a payment arrangement.

There are other options, such as paying by credit card. Note: There may be a fee to pay by credit card.

What if I need to make another correction to my account?
You'll need to file Form 1040X, Amended U.S. Individual Income Tax Return.

What if I have tried to get answers and after contacting IRS several times have not been successful?
Call Taxpayer Advocate at 1-877-777-4778 or for TTY/TDD 1-800-829-4059.

What if I think I’m a victim of identity theft?
Please contact us at the number listed on the top right corner of your notice. Refer to the IRS Identity Theft resource page for more information.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Page Last Reviewed or Updated: 26-Feb-2014

The Amend 2011 Federal Return

Amend 2011 federal return Publication 969 - Main Content Table of Contents Health Savings Accounts (HSAs)Qualifying for an HSA Contributions to an HSA Distributions From an HSA Balance in an HSA Death of HSA Holder Filing Form 8889 Employer Participation Medical Savings Accounts (MSAs)Archer MSAs Contributions to an MSA Distributions From an MSA Balance in an Archer MSA Death of the Archer MSA Holder Filing Form 8853 Employer Participation Medicare Advantage MSAs Flexible Spending Arrangements (FSAs)Qualifying for an FSA Contributions to an FSA Distributions From an FSA Balance in an FSA Employer Participation Health Reimbursement Arrangements (HRAs)Qualifying for an HRA Contributions to an HRA Distributions From an HRA Balance in an HRA Employer Participation How To Get Tax HelpLow Income Taxpayer Clinics Health Savings Accounts (HSAs) A health savings account (HSA) is a tax-exempt trust or custodial account you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. Amend 2011 federal return You must be an eligible individual to qualify for an HSA. Amend 2011 federal return No permission or authorization from the IRS is necessary to establish an HSA. Amend 2011 federal return You set up an HSA with a trustee. Amend 2011 federal return A qualified HSA trustee can be a bank, an insurance company, or anyone already approved by the IRS to be a trustee of individual retirement arrangements (IRAs) or Archer MSAs. Amend 2011 federal return The HSA can be established through a trustee that is different from your health plan provider. Amend 2011 federal return Your employer may already have some information on HSA trustees in your area. Amend 2011 federal return If you have an Archer MSA, you can generally roll it over into an HSA tax free. Amend 2011 federal return See Rollovers, later. Amend 2011 federal return What are the benefits of an HSA?   You may enjoy several benefits from having an HSA. Amend 2011 federal return You can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you do not itemize your deductions on Form 1040. Amend 2011 federal return Contributions to your HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income. Amend 2011 federal return The contributions remain in your account until you use them. Amend 2011 federal return The interest or other earnings on the assets in the account are tax free. Amend 2011 federal return Distributions may be tax free if you pay qualified medical expenses. Amend 2011 federal return See Qualified medical expenses , later. Amend 2011 federal return An HSA is “portable. Amend 2011 federal return ” It stays with you if you change employers or leave the work force. Amend 2011 federal return Qualifying for an HSA To be an eligible individual and qualify for an HSA, you must meet the following requirements. Amend 2011 federal return You must be covered under a high deductible health plan (HDHP), described later, on the first day of the month. Amend 2011 federal return You have no other health coverage except what is permitted under Other health coverage , later. Amend 2011 federal return You are not enrolled in Medicare. Amend 2011 federal return You cannot be claimed as a dependent on someone else's 2013 tax return. Amend 2011 federal return Under the last-month rule, you are considered to be an eligible individual for the entire year if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers). Amend 2011 federal return If you meet these requirements, you are an eligible individual even if your spouse has non-HDHP family coverage, provided your spouse's coverage does not cover you. Amend 2011 federal return If another taxpayer is entitled to claim an exemption for you, you cannot claim a deduction for an HSA contribution. Amend 2011 federal return This is true even if the other person does not actually claim your exemption. Amend 2011 federal return Each spouse who is an eligible individual who wants an HSA must open a separate HSA. Amend 2011 federal return You cannot have a joint HSA. Amend 2011 federal return High deductible health plan (HDHP). Amend 2011 federal return   An HDHP has: A higher annual deductible than typical health plans, and A maximum limit on the sum of the annual deductible and out-of-pocket medical expenses that you must pay for covered expenses. Amend 2011 federal return Out-of-pocket expenses include copayments and other amounts, but do not include premiums. Amend 2011 federal return   An HDHP may provide preventive care benefits without a deductible or with a deductible less than the minimum annual deductible. Amend 2011 federal return Preventive care includes, but is not limited to, the following. Amend 2011 federal return Periodic health evaluations, including tests and diagnostic procedures ordered in connection with routine examinations, such as annual physicals. Amend 2011 federal return Routine prenatal and well-child care. Amend 2011 federal return Child and adult immunizations. Amend 2011 federal return Tobacco cessation programs. Amend 2011 federal return Obesity weight-loss programs. Amend 2011 federal return Screening services. Amend 2011 federal return This includes screening services for the following: Cancer. Amend 2011 federal return Heart and vascular diseases. Amend 2011 federal return Infectious diseases. Amend 2011 federal return Mental health conditions. Amend 2011 federal return Substance abuse. Amend 2011 federal return Metabolic, nutritional, and endocrine conditions. Amend 2011 federal return Musculoskeletal disorders. Amend 2011 federal return Obstetric and gynecological conditions. Amend 2011 federal return Pediatric conditions. Amend 2011 federal return Vision and hearing disorders. Amend 2011 federal return For more information on screening services, see Notice 2004-23, 2004-15 I. Amend 2011 federal return R. Amend 2011 federal return B. Amend 2011 federal return 725 available at www. Amend 2011 federal return irs. Amend 2011 federal return gov/irb/2004-15_IRB/ar10. Amend 2011 federal return html. Amend 2011 federal return     The following table shows the minimum annual deductible and maximum annual deductible and other out-of-pocket expenses for HDHPs for 2013. Amend 2011 federal return      Self-only coverage Family coverage Minimum annual deductible $1,250 $2,500 Maximum annual deductible and other out-of-pocket expenses* $6,250 $12,500 * This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. Amend 2011 federal return Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit applies. Amend 2011 federal return    The following table shows the minimum annual deductible and maximum annual deductible and other out-of-pocket expenses for HDHPs for 2014. Amend 2011 federal return      Self-only coverage Family coverage Minimum annual deductible $1,250 $2,500 Maximum annual deductible and other out-of-pocket expenses* $6,350 $12,700 * This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. Amend 2011 federal return Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit applies. Amend 2011 federal return   Self-only HDHP coverage is an HDHP covering only an eligible individual. Amend 2011 federal return Family HDHP coverage is an HDHP covering an eligible individual and at least one other individual (whether or not that individual is an eligible individual). Amend 2011 federal return Example. Amend 2011 federal return An eligible individual and his dependent child are covered under an “employee plus one” HDHP offered by the individual's employer. Amend 2011 federal return This is family HDHP coverage. Amend 2011 federal return Family plans that do not meet the high deductible rules. Amend 2011 federal return   There are some family plans that have deductibles for both the family as a whole and for individual family members. Amend 2011 federal return Under these plans, if you meet the individual deductible for one family member, you do not have to meet the higher annual deductible amount for the family. Amend 2011 federal return If either the deductible for the family as a whole or the deductible for an individual family member is less than the minimum annual deductible for family coverage, the plan does not qualify as an HDHP. Amend 2011 federal return Example. Amend 2011 federal return You have family health insurance coverage in 2013. Amend 2011 federal return The annual deductible for the family plan is $3,500. Amend 2011 federal return This plan also has an individual deductible of $1,500 for each family member. Amend 2011 federal return The plan does not qualify as an HDHP because the deductible for an individual family member is less than the minimum annual deductible ($2,500) for family coverage. Amend 2011 federal return Other health coverage. Amend 2011 federal return   You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not an HDHP. Amend 2011 federal return However, you can still be an eligible individual even if your spouse has non-HDHP coverage provided you are not covered by that plan. Amend 2011 federal return    You can have additional insurance that provides benefits only for the following items. Amend 2011 federal return Liabilities incurred under workers' compensation laws, tort liabilities, or liabilities related to ownership or use of property. Amend 2011 federal return A specific disease or illness. Amend 2011 federal return A fixed amount per day (or other period) of hospitalization. Amend 2011 federal return   You can also have coverage (whether provided through insurance or otherwise) for the following items. Amend 2011 federal return Accidents. Amend 2011 federal return Disability. Amend 2011 federal return Dental care. Amend 2011 federal return Vision care. Amend 2011 federal return Long-term care. Amend 2011 federal return    Plans in which substantially all of the coverage is through the items listed earlier are not HDHPs. Amend 2011 federal return For example, if your plan provides coverage substantially all of which is for a specific disease or illness, the plan is not an HDHP for purposes of establishing an HSA. Amend 2011 federal return Prescription drug plans. Amend 2011 federal return   You can have a prescription drug plan, either as part of your HDHP or a separate plan (or rider), and qualify as an eligible individual if the plan does not provide benefits until the minimum annual deductible of the HDHP has been met. Amend 2011 federal return If you can receive benefits before that deductible is met, you are not an eligible individual. Amend 2011 federal return Other employee health plans. Amend 2011 federal return   An employee covered by an HDHP and a health FSA or an HRA that pays or reimburses qualified medical expenses generally cannot make contributions to an HSA. Amend 2011 federal return Health FSAs and HRAs are discussed later. Amend 2011 federal return   However, an employee can make contributions to an HSA while covered under an HDHP and one or more of the following arrangements. Amend 2011 federal return Limited-purpose health FSA or HRA. Amend 2011 federal return These arrangements can pay or reimburse the items listed earlier under Other health coverage except long-term care. Amend 2011 federal return Also, these arrangements can pay or reimburse preventive care expenses because they can be paid without having to satisfy the deductible. Amend 2011 federal return Suspended HRA. Amend 2011 federal return Before the beginning of an HRA coverage period, you can elect to suspend the HRA. Amend 2011 federal return The HRA does not pay or reimburse, at any time, the medical expenses incurred during the suspension period except preventive care and items listed under Other health coverage. Amend 2011 federal return When the suspension period ends, you are no longer eligible to make contributions to an HSA. Amend 2011 federal return Post-deductible health FSA or HRA. Amend 2011 federal return These arrangements do not pay or reimburse any medical expenses incurred before the minimum annual deductible amount is met. Amend 2011 federal return The deductible for these arrangements does not have to be the same as the deductible for the HDHP, but benefits may not be provided before the minimum annual deductible amount is met. Amend 2011 federal return Retirement HRA. Amend 2011 federal return This arrangement pays or reimburses only those medical expenses incurred after retirement. Amend 2011 federal return After retirement you are no longer eligible to make contributions to an HSA. Amend 2011 federal return Health FSA – grace period. Amend 2011 federal return   Coverage during a grace period by a general purpose health FSA is allowed if the balance in the health FSA at the end of its prior year plan is zero. Amend 2011 federal return See Flexible Spending Arrangements (FSAs) , later. Amend 2011 federal return Contributions to an HSA Any eligible individual can contribute to an HSA. Amend 2011 federal return For an employee's HSA, the employee, the employee's employer, or both may contribute to the employee's HSA in the same year. Amend 2011 federal return For an HSA established by a self-employed (or unemployed) individual, the individual can contribute. Amend 2011 federal return Family members or any other person may also make contributions on behalf of an eligible individual. Amend 2011 federal return Contributions to an HSA must be made in cash. Amend 2011 federal return Contributions of stock or property are not allowed. Amend 2011 federal return Limit on Contributions The amount you or any other person can contribute to your HSA depends on the type of HDHP coverage you have, your age, the date you become an eligible individual, and the date you cease to be an eligible individual. Amend 2011 federal return For 2013, if you have self-only HDHP coverage, you can contribute up to $3,250. Amend 2011 federal return If you have family HDHP coverage, you can contribute up to $6,450. Amend 2011 federal return For 2014, if you have self-only HDHP coverage, you can contribute up to $3,300. Amend 2011 federal return If you have family HDHP coverage you can contribute up to $6,550. Amend 2011 federal return If you were, or were considered (under the last-month rule, discussed later), an eligible individual for the entire year and did not change your type of coverage, you can contribute the full amount based on your type of coverage. Amend 2011 federal return However, if you were not an eligible individual for the entire year or changed your coverage during the year, your contribution limit is the greater of: The limitation shown on the Line 3 Limitation Chart and Worksheetin the Instructions for Form 8889, Health Savings Accounts (HSAs), or The maximum annual HSA contribution based on your HDHP coverage (self-only or family) on the first day of the last month of your tax year. Amend 2011 federal return If you had family HDHP coverage on the first day of the last month of your tax year, your contribution limit for 2013 is $6,450 even if you changed coverage during the year. Amend 2011 federal return Last-month rule. Amend 2011 federal return   Under the last-month rule, if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers), you are considered an eligible individual for the entire year. Amend 2011 federal return You are treated as having the same HDHP coverage for the entire year as you had on the first day of the last month. Amend 2011 federal return Testing period. Amend 2011 federal return   If contributions were made to your HSA based on you being an eligible individual for the entire year under the last-month rule, you must remain an eligible individual during the testing period. Amend 2011 federal return For the last-month rule, the testing period begins with the last month of your tax year and ends on the last day of the 12th month following that month. Amend 2011 federal return For example, December 1, 2013, through December 31, 2014. Amend 2011 federal return   If you fail to remain an eligible individual during the testing period, other than because of death or becoming disabled, you will have to include in income the total contributions made to your HSA that would not have been made except for the last-month rule. Amend 2011 federal return You include this amount in your income in the year in which you fail to be an eligible individual. Amend 2011 federal return This amount is also subject to a 10% additional tax. Amend 2011 federal return The income and additional tax are shown on Form 8889, Part III. Amend 2011 federal return Example 1. Amend 2011 federal return Chris, age 53, becomes an eligible individual on December 1, 2013. Amend 2011 federal return He has family HDHP coverage on that date. Amend 2011 federal return Under the last-month rule, he contributes $6,450 to his HSA. Amend 2011 federal return Chris fails to be an eligible individual in June 2014. Amend 2011 federal return Because Chris did not remain an eligible individual during the testing period (December 1, 2013, through December 31, 2014), he must include in his 2014 income the contributions made in 2013 that would not have been made except for the last-month rule. Amend 2011 federal return Chris uses the worksheet in the Form 8889 instructions to determine this amount. Amend 2011 federal return January -0- February -0- March -0- April -0- May -0- June -0- July -0- August -0- September -0- October -0- November -0- December $6,450. Amend 2011 federal return 00 Total for all months $6,450. Amend 2011 federal return 00 Limitation. Amend 2011 federal return Divide the total by 12 $537. Amend 2011 federal return 50 Chris would include $5,912. Amend 2011 federal return 50 ($6,450. Amend 2011 federal return 00 – $537. Amend 2011 federal return 50) in his gross income on his 2014 tax return. Amend 2011 federal return Also, a 10% additional tax applies to this amount. Amend 2011 federal return Example 2. Amend 2011 federal return Erika, age 39, has self-only HDHP coverage on January 1, 2013. Amend 2011 federal return Erika changes to family HDHP coverage on November 1, 2013. Amend 2011 federal return Because Erika has family HDHP coverage on December 1, 2013, she contributes $6,450 for 2013. Amend 2011 federal return Erika fails to be an eligible individual in March 2014. Amend 2011 federal return Because she did not remain an eligible individual during the testing period (December 1, 2013, through December 31, 2014), she must include in income the contribution made that would not have been made except for the last-month rule. Amend 2011 federal return Erika uses the worksheet in the Form 8889 instructions to determine this amount. Amend 2011 federal return January $3,250. Amend 2011 federal return 00 February $3,250. Amend 2011 federal return 00 March $3,250. Amend 2011 federal return 00 April $3,250. Amend 2011 federal return 00 May $3,250. Amend 2011 federal return 00 June $3,250. Amend 2011 federal return 00 July $3,250. Amend 2011 federal return 00 August $3,250. Amend 2011 federal return 00 September $3,250. Amend 2011 federal return 00 October $3,250. Amend 2011 federal return 00 November $6,450. Amend 2011 federal return 00 December $6,450. Amend 2011 federal return 00 Total for all months $45,400. Amend 2011 federal return 00 Limitation. Amend 2011 federal return Divide the total by 12 $3,783. Amend 2011 federal return 34 Erika would include $2,666. Amend 2011 federal return 67 ($6,450 – $3,783. Amend 2011 federal return 34) in her gross income on her 2014 tax return. Amend 2011 federal return Also, a 10% additional tax applies to this amount. Amend 2011 federal return Additional contribution. Amend 2011 federal return   If you are an eligible individual who is age 55 or older at the end of your tax year, your contribution limit is increased by $1,000. Amend 2011 federal return For example, if you have self-only coverage, you can contribute up to $4,250 (the contribution limit for self-only coverage ($3,250) plus the additional contribution of $1,000). Amend 2011 federal return However, see Enrolled in Medicare , later. Amend 2011 federal return If you have more than one HSA in 2013, your total contributions to all the HSAs cannot be more than the limits discussed earlier. Amend 2011 federal return Reduction of contribution limit. Amend 2011 federal return   You must reduce the amount that can be contributed (including any additional contribution) to your HSA by the amount of any contribution made to your Archer MSA (including employer contributions) for the year. Amend 2011 federal return A special rule applies to married people, discussed next, if each spouse has family coverage under an HDHP. Amend 2011 federal return Rules for married people. Amend 2011 federal return   If either spouse has family HDHP coverage, both spouses are treated as having family HDHP coverage. Amend 2011 federal return If each spouse has family coverage under a separate plan, the contribution limit for 2013 is $6,450. Amend 2011 federal return You must reduce the limit on contributions, before taking into account any additional contributions, by the amount contributed to both spouses' Archer MSAs. Amend 2011 federal return After that reduction, the contribution limit is split equally between the spouses unless you agree on a different division. Amend 2011 federal return The rules for married people apply only if both spouses are eligible individuals. Amend 2011 federal return If both spouses are 55 or older and not enrolled in Medicare, each spouse's contribution limit is increased by the additional contribution. Amend 2011 federal return If both spouses meet the age requirement, the total contributions under family coverage cannot be more than $8,450. Amend 2011 federal return Each spouse must make the additional contribution to his or her own HSA. Amend 2011 federal return Example. Amend 2011 federal return For 2013, Mr. Amend 2011 federal return Auburn and his wife are both eligible individuals. Amend 2011 federal return They each have family coverage under separate HDHPs. Amend 2011 federal return Mr. Amend 2011 federal return Auburn is 58 years old and Mrs. Amend 2011 federal return Auburn is 53. Amend 2011 federal return Mr. Amend 2011 federal return and Mrs. Amend 2011 federal return Auburn can split the family contribution limit ($6,450) equally or they can agree on a different division. Amend 2011 federal return If they split it equally, Mr. Amend 2011 federal return Auburn can contribute $4,225 to an HSA (one-half the maximum contribution for family coverage ($3,225) + $1,000 additional contribution) and Mrs. Amend 2011 federal return Auburn can contribute $3,225 to an HSA. Amend 2011 federal return Employer contributions. Amend 2011 federal return   You must reduce the amount you, or any other person, can contribute to your HSA by the amount of any contributions made by your employer that are excludable from your income. Amend 2011 federal return This includes amounts contributed to your account by your employer through a cafeteria plan. Amend 2011 federal return Enrolled in Medicare. Amend 2011 federal return   Beginning with the first month you are enrolled in Medicare, your contribution limit is zero. Amend 2011 federal return Example. Amend 2011 federal return You turned age 65 in July 2013 and enrolled in Medicare. Amend 2011 federal return You had an HDHP with self-only coverage and are eligible for an additional contribution of $1,000. Amend 2011 federal return Your contribution limit is $2,125 ($4,250 × 6 ÷ 12). Amend 2011 federal return Qualified HSA funding distribution. Amend 2011 federal return   A qualified HSA funding distribution may be made from your traditional IRA or Roth IRA to your HSA. Amend 2011 federal return This distribution cannot be made from an ongoing SEP IRA or SIMPLE IRA. Amend 2011 federal return For this purpose, a SEP IRA or SIMPLE IRA is ongoing if an employer contribution is made for the plan year ending with or within your tax year in which the distribution would be made. Amend 2011 federal return   The maximum qualified HSA funding distribution depends on the HDHP coverage (self-only or family) you have on the first day of the month in which the contribution is made and your age as of the end of the tax year. Amend 2011 federal return The distribution must be made directly by the trustee of the IRA to the trustee of the HSA. Amend 2011 federal return The distribution is not included in your income, is not deductible, and reduces the amount that can be contributed to your HSA. Amend 2011 federal return The qualified HSA funding distribution is shown on Form 8889 for the year in which the distribution is made. Amend 2011 federal return   You can make only one qualified HSA funding distribution during your lifetime. Amend 2011 federal return However, if you make a distribution during a month when you have self-only HDHP coverage, you can make another qualified HSA funding distribution in a later month in that tax year if you change to family HDHP coverage. Amend 2011 federal return The total qualified HSA funding distribution cannot be more than the contribution limit for family HDHP coverage plus any additional contribution to which you are entitled. Amend 2011 federal return Example. Amend 2011 federal return In 2013, you are an eligible individual, age 57, with self-only HDHP coverage. Amend 2011 federal return You can make a qualified HSA funding distribution of $4,250 ($3,250 plus $1,000 additional contribution). Amend 2011 federal return Funding distribution – testing period. Amend 2011 federal return   You must remain an eligible individual during the testing period. Amend 2011 federal return For a qualified HSA funding distribution, the testing period begins with the month in which the qualified HSA funding distribution is contributed and ends on the last day of the 12th month following that month. Amend 2011 federal return For example, if a qualified HSA funding distribution is contributed to your HSA on August 10, 2013, your testing period begins in August 2013, and ends on August 31, 2014. Amend 2011 federal return   If you fail to remain an eligible individual during the testing period, other than because of death or becoming disabled, you will have to include in income the qualified HSA funding distribution. Amend 2011 federal return You include this amount in income in the year in which you fail to be an eligible individual. Amend 2011 federal return This amount is also subject to a 10% additional tax. Amend 2011 federal return The income and the additional tax are shown on Form 8889, Part III. Amend 2011 federal return   Each qualified HSA funding distribution allowed has its own testing period. Amend 2011 federal return For example, you are an eligible individual, age 45, with self-only HDHP coverage. Amend 2011 federal return On June 18, 2013, you make a qualified HSA funding distribution of $3,250. Amend 2011 federal return On July 27, 2013, you enroll in family HDHP coverage and on August 17, 2013, you make a qualified HSA funding distribution of $3,200. Amend 2011 federal return Your testing period for the first distribution begins in June 2013 and ends on June 30, 2014. Amend 2011 federal return Your testing period for the second distribution begins in August 2013 and ends on August 31, 2014. Amend 2011 federal return   The testing period rule that applies under the last-month rule (discussed earlier) does not apply to amounts contributed to an HSA through a qualified HSA funding distribution. Amend 2011 federal return If you remain an eligible individual during the entire funding distribution testing period, then no amount of that distribution is included in income and will not be subject to the additional tax for failing to meet the last-month rule testing period. Amend 2011 federal return Rollovers A rollover contribution is not included in your income, is not deductible, and does not reduce your contribution limit. Amend 2011 federal return Archer MSAs and other HSAs. Amend 2011 federal return   You can roll over amounts from Archer MSAs and other HSAs into an HSA. Amend 2011 federal return You do not have to be an eligible individual to make a rollover contribution from your existing HSA to a new HSA. Amend 2011 federal return Rollover contributions do not need to be in cash. Amend 2011 federal return Rollovers are not subject to the annual contribution limits. Amend 2011 federal return   You must roll over the amount within 60 days after the date of receipt. Amend 2011 federal return You can make only one rollover contribution to an HSA during a 1-year period. Amend 2011 federal return Note. Amend 2011 federal return If you instruct the trustee of your HSA to transfer funds directly to the trustee of another of your HSAs, the transfer is not considered a rollover. Amend 2011 federal return There is no limit on the number of these transfers. Amend 2011 federal return Do not include the amount transferred in income, deduct it as a contribution, or include it as a distribution on Form 8889. Amend 2011 federal return When To Contribute You can make contributions to your HSA for 2013 until April 15, 2014. Amend 2011 federal return If you fail to be an eligible individual during 2013, you can still make contributions, up until April 15, 2014, for the months you were an eligible individual. Amend 2011 federal return Your employer can make contributions to your HSA between January 1, 2014, and April 15, 2014, that are allocated to 2013. Amend 2011 federal return Your employer must notify you and the trustee of your HSA that the contribution is for 2013. Amend 2011 federal return The contribution will be reported on your 2014 Form W-2. Amend 2011 federal return Reporting Contributions on Your Return Contributions made by your employer are not included in your income. Amend 2011 federal return Contributions to an employee's account by an employer using the amount of an employee's salary reduction through a cafeteria plan are treated as employer contributions. Amend 2011 federal return Generally, you can claim contributions you made and contributions made by any other person, other than your employer, on your behalf, as an adjustment to income. Amend 2011 federal return Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. Amend 2011 federal return The contributions are treated as a distribution of money and are not included in the partner's gross income. Amend 2011 federal return Contributions by a partnership to a partner's HSA for services rendered are treated as guaranteed payments that are deductible by the partnership and includible in the partner's gross income. Amend 2011 federal return In both situations, the partner can deduct the contribution made to the partner's HSA. Amend 2011 federal return Contributions by an S corporation to a 2% shareholder-employee's HSA for services rendered are treated as guaranteed payments and are deductible by the S corporation and includible in the shareholder-employee's gross income. Amend 2011 federal return The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. Amend 2011 federal return Form 8889. Amend 2011 federal return   Report all contributions to your HSA on Form 8889 and file it with your Form 1040 or Form 1040NR. Amend 2011 federal return You should include all contributions made for 2013, including those made by April 15, 2014, that are designated for 2013. Amend 2011 federal return Contributions made by your employer and qualified HSA funding distributions are also shown on the form. Amend 2011 federal return   You should receive Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, from the trustee showing the amount contributed to your HSA during the year. Amend 2011 federal return Your employer's contributions also will be shown in box 12 of Form W-2, Wage and Tax Statement, with code W. Amend 2011 federal return Follow the instructions for Form 8889. Amend 2011 federal return Report your HSA deduction on Form 1040 or Form 1040NR. Amend 2011 federal return Excess contributions. Amend 2011 federal return   You will have excess contributions if the contributions to your HSA for the year are greater than the limits discussed earlier. Amend 2011 federal return Excess contributions are not deductible. Amend 2011 federal return Excess contributions made by your employer are included in your gross income. Amend 2011 federal return If the excess contribution is not included in box 1 of Form W-2, you must report the excess as “Other income” on your tax return. Amend 2011 federal return   Generally, you must pay a 6% excise tax on excess contributions. Amend 2011 federal return See Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. Amend 2011 federal return The excise tax applies to each tax year the excess contribution remains in the account. Amend 2011 federal return   You may withdraw some or all of the excess contributions and not pay the excise tax on the amount withdrawn if you meet the following conditions. Amend 2011 federal return You withdraw the excess contributions by the due date, including extensions, of your tax return for the year the contributions were made. Amend 2011 federal return You withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings. Amend 2011 federal return If you fail to remain an eligible individual during any of the testing periods, discussed earlier, the amount you have to include in income is not an excess contribution. Amend 2011 federal return If you withdraw any of those amounts, the amount is treated the same as any other distribution from an HSA, discussed later. Amend 2011 federal return Deducting an excess contribution in a later year. Amend 2011 federal return   You may be able to deduct excess contributions for previous years that are still in your HSA. Amend 2011 federal return The excess contribution you can deduct for the current year is the lesser of the following two amounts. Amend 2011 federal return Your maximum HSA contribution limit for the year minus any amounts contributed to your HSA for the year. Amend 2011 federal return The total excess contributions in your HSA at the beginning of the year. Amend 2011 federal return   Amounts contributed for the year include contributions by you, your employer, and any other person. Amend 2011 federal return They also include any qualified HSA funding distribution made to your HSA. Amend 2011 federal return Any excess contribution remaining at the end of a tax year is subject to the excise tax. Amend 2011 federal return See Form 5329. Amend 2011 federal return Distributions From an HSA You will generally pay medical expenses during the year without being reimbursed by your HDHP until you reach the annual deductible for the plan. Amend 2011 federal return When you pay medical expenses during the year that are not reimbursed by your HDHP, you can ask the trustee of your HSA to send you a distribution from your HSA. Amend 2011 federal return You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. Amend 2011 federal return If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax. Amend 2011 federal return You do not have to make distributions from your HSA each year. Amend 2011 federal return If you are no longer an eligible individual, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses. Amend 2011 federal return Generally, a distribution is money you get from your health savings account. Amend 2011 federal return Your total distributions include amounts paid with a debit card that restricts payments to health care and amounts withdrawn from the HSA by other individuals that you have designated. Amend 2011 federal return The trustee will report any distribution to you and the IRS on Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. Amend 2011 federal return Qualified medical expenses. Amend 2011 federal return   Qualified medical expenses are those expenses that would generally qualify for the medical and dental expenses deduction. Amend 2011 federal return These are explained in Publication 502, Medical and Dental Expenses. Amend 2011 federal return   Also, non-prescription medicines (other than insulin) are not considered qualified medical expenses for HSA purposes. Amend 2011 federal return A medicine or drug will be a qualified medical expense for HSA purposes only if the medicine or drug: Requires a prescription, Is available without a prescription (an over-the-counter medicine or drug) and you get a prescription for it, or Is insulin. Amend 2011 federal return   For HSA purposes, expenses incurred before you establish your HSA are not qualified medical expenses. Amend 2011 federal return State law determines when an HSA is established. Amend 2011 federal return An HSA that is funded by amounts rolled over from an Archer MSA or another HSA is established on the date the prior account was established. Amend 2011 federal return   If, under the last-month rule, you are considered to be an eligible individual for the entire year for determining the contribution amount, only those expenses incurred after you actually establish your HSA are qualified medical expenses. Amend 2011 federal return   Qualified medical expenses are those incurred by the following persons. Amend 2011 federal return You and your spouse. Amend 2011 federal return All dependents you claim on your tax return. Amend 2011 federal return Any person you could have claimed as a dependent on your return except that: The person filed a joint return, The person had gross income of $3,900 or more, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Amend 2011 federal return    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. Amend 2011 federal return You cannot deduct qualified medical expenses as an itemized deduction on Schedule A (Form 1040) that are equal to the tax-free distribution from your HSA. Amend 2011 federal return Insurance premiums. Amend 2011 federal return   You cannot treat insurance premiums as qualified medical expenses unless the premiums are for: Long-term care insurance. Amend 2011 federal return Health care continuation coverage (such as coverage under COBRA). Amend 2011 federal return Health care coverage while receiving unemployment compensation under federal or state law. Amend 2011 federal return Medicare and other health care coverage if you were 65 or older (other than premiums for a Medicare supplemental policy, such as Medigap). Amend 2011 federal return   The premiums for long-term care insurance (item (1)) that you can treat as qualified medical expenses are subject to limits based on age and are adjusted annually. Amend 2011 federal return See Limit on long-term care premiums you can deduct in the instructions for Schedule A (Form 1040). Amend 2011 federal return   Items (2) and (3) can be for your spouse or a dependent meeting the requirement for that type of coverage. Amend 2011 federal return For item (4), if you, the account beneficiary, are not 65 or older, Medicare premiums for coverage of your spouse or a dependent (who is 65 or older) generally are not qualified medical expenses. Amend 2011 federal return Health coverage tax credit. Amend 2011 federal return   You cannot claim this credit for premiums that you pay with a tax-free distribution from your HSA. Amend 2011 federal return See Publication 502 for more information on this credit. Amend 2011 federal return Deemed distributions from HSAs. Amend 2011 federal return   The following situations result in deemed taxable distributions from your HSA. Amend 2011 federal return You engaged in any transaction prohibited by section 4975 with respect to any of your HSAs, at any time in 2013. Amend 2011 federal return Your account ceases to be an HSA as of January 1, 2013, and you must include the fair market value of all assets in the account as of January 1, 2013, on Form 8889. Amend 2011 federal return You used any portion of any of your HSAs as security for a loan at any time in 2013. Amend 2011 federal return You must include the fair market value of the assets used as security for the loan as income on Form 1040 or Form 1040NR. Amend 2011 federal return   Examples of prohibited transactions include the direct or indirect: Sale, exchange, or leasing of property between you and the HSA, Lending of money between you and the HSA, Furnishing goods, services, or facilities between you and the HSA, and Transfer to or use by you, or for your benefit, of any assets of the HSA. Amend 2011 federal return   Any deemed distribution will not be treated as used to pay qualified medical expenses. Amend 2011 federal return These distributions are included in your income and are subject to the additional 20% tax, discussed later. Amend 2011 federal return Recordkeeping. Amend 2011 federal return You must keep records sufficient to show that: The distributions were exclusively to pay or reimburse qualified medical expenses, The qualified medical expenses had not been previously paid or reimbursed from another source, and The medical expenses had not been taken as an itemized deduction in any year. Amend 2011 federal return Do not send these records with your tax return. Amend 2011 federal return Keep them with your tax records. Amend 2011 federal return Reporting Distributions on Your Return How you report your distributions depends on whether or not you use the distribution for qualified medical expenses (defined earlier). Amend 2011 federal return If you use a distribution from your HSA for qualified medical expenses, you do not pay tax on the distribution but you have to report the distribution on Form 8889. Amend 2011 federal return However, the distribution of an excess contribution taken out after the due date, including extensions, of your return is subject to tax even if used for qualified medical expenses. Amend 2011 federal return Follow the instructions for the form and file it with your Form 1040 or Form 1040NR. Amend 2011 federal return If you do not use a distribution from your HSA for qualified medical expenses, you must pay tax on the distribution. Amend 2011 federal return Report the amount on Form 8889 and file it with your Form 1040 or Form 1040NR. Amend 2011 federal return You may have to pay an additional 20% tax on your taxable distribution. Amend 2011 federal return HSA administration and maintenance fees withdrawn by the trustee are not reported as distributions from the HSA. Amend 2011 federal return Additional tax. Amend 2011 federal return   There is an additional 20% tax on the part of your distributions not used for qualified medical expenses. Amend 2011 federal return Figure the tax on Form 8889 and file it with your Form 1040 or Form 1040NR. Amend 2011 federal return Exceptions. Amend 2011 federal return   There is no additional tax on distributions made after the date you are disabled, reach age 65, or die. Amend 2011 federal return Balance in an HSA An HSA is generally exempt from tax. Amend 2011 federal return You are permitted to take a distribution from your HSA at any time; however, only those amounts used exclusively to pay for qualified medical expenses are tax free. Amend 2011 federal return Amounts that remain at the end of the year are generally carried over to the next year (see Excess contributions , earlier). Amend 2011 federal return Earnings on amounts in an HSA are not included in your income while held in the HSA. Amend 2011 federal return Death of HSA Holder You should choose a beneficiary when you set up your HSA. Amend 2011 federal return What happens to that HSA when you die depends on whom you designate as the beneficiary. Amend 2011 federal return Spouse is the designated beneficiary. Amend 2011 federal return   If your spouse is the designated beneficiary of your HSA, it will be treated as your spouse's HSA after your death. Amend 2011 federal return Spouse is not the designated beneficiary. Amend 2011 federal return   If your spouse is not the designated beneficiary of your HSA: The account stops being an HSA, and The fair market value of the HSA becomes taxable to the beneficiary in the year in which you die. Amend 2011 federal return If your estate is the beneficiary, the value is included on your final income tax return. Amend 2011 federal return The amount taxable to a beneficiary other than the estate is reduced by any qualified medical expenses for the decedent that are paid by the beneficiary within 1 year after the date of death. Amend 2011 federal return Filing Form 8889 You must file Form 8889 with your Form 1040 or Form 1040NR if you (or your spouse, if married filing a joint return) had any activity in your HSA during the year. Amend 2011 federal return You must file the form even if only your employer or your spouse's employer made contributions to the HSA. Amend 2011 federal return If, during the tax year, you are the beneficiary of two or more HSAs or you are a beneficiary of an HSA and you have your own HSA, you must complete a separate Form 8889 for each HSA. Amend 2011 federal return Enter “statement” at the top of each Form 8889 and complete the form as instructed. Amend 2011 federal return Next, complete a controlling Form 8889 combining the amounts shown on each of the statement Forms 8889. Amend 2011 federal return Attach the statements to your tax return after the controlling Form 8889. Amend 2011 federal return Employer Participation This section contains the rules that employers must follow if they decide to make HSAs available to their employees. Amend 2011 federal return Unlike the previous discussions, “you” refers to the employer and not to the employee. Amend 2011 federal return Health plan. Amend 2011 federal return   If you want your employees to be able to have an HSA, they must have an HDHP. Amend 2011 federal return You can provide no additional coverage other than those exceptions listed previously under Other health coverage . Amend 2011 federal return Contributions. Amend 2011 federal return   You can make contributions to your employees' HSAs. Amend 2011 federal return You deduct the contributions on your business income tax return for the year in which you make the contributions. Amend 2011 federal return If the contribution is allocated to the prior year, you still deduct it in the year in which you made the contribution. Amend 2011 federal return   For more information on employer contributions, see Notice 2008-59, 2008-29 I. Amend 2011 federal return R. Amend 2011 federal return B. Amend 2011 federal return 123, questions 23 through 27, available at www. Amend 2011 federal return irs. Amend 2011 federal return gov/irb/2008-29_IRB/ar11. Amend 2011 federal return html. Amend 2011 federal return Comparable contributions. Amend 2011 federal return   If you decide to make contributions, you must make comparable contributions to all comparable participating employees' HSAs. Amend 2011 federal return Your contributions are comparable if they are either: The same amount, or The same percentage of the annual deductible limit under the HDHP covering the employees. Amend 2011 federal return The comparability rules do not apply to contributions made through a cafeteria plan. Amend 2011 federal return Comparable participating employees. Amend 2011 federal return   Comparable participating employees: Are covered by your HDHP and are eligible to establish an HSA, Have the same category of coverage (either self-only or family coverage), and Have the same category of employment (part-time, full-time, or former employees). Amend 2011 federal return   To meet the comparability requirements for eligible employees who have not established an HSA by December 31 or have not notified you that they have an HSA, you must meet a notice requirement and a contribution requirement. Amend 2011 federal return   You will meet the notice requirement if by January 15 of the following calendar year you provide a written notice to all such employees. Amend 2011 federal return The notice must state that each eligible employee who, by the last day of February, establishes an HSA and notifies you that they have established an HSA will receive a comparable contribution to the HSA for the prior year. Amend 2011 federal return For a sample of the notice, see Regulation 54. Amend 2011 federal return 4980G-4 A-14(c). Amend 2011 federal return You will meet the contribution requirement for these employees if by April 15, 2014, you contribute comparable amounts plus reasonable interest to the employee's HSA for the prior year. Amend 2011 federal return Note. Amend 2011 federal return For purposes of making contributions to HSAs of non-highly compensated employees, highly compensated employees shall not be treated as comparable participating employees. Amend 2011 federal return Excise tax. Amend 2011 federal return   If you made contributions to your employees' HSAs that were not comparable, you must pay an excise tax of 35% of the amount you contributed. Amend 2011 federal return Employment taxes. Amend 2011 federal return   Amounts you contribute to your employees' HSAs are generally not subject to employment taxes. Amend 2011 federal return You must report the contributions in box 12 of the Form W-2 you file for each employee. Amend 2011 federal return This includes the amounts the employee elected to contribute through a cafeteria plan. Amend 2011 federal return Enter code “W” in box 12. Amend 2011 federal return Medical Savings Accounts (MSAs) Archer MSAs were created to help self-employed individuals and employees of certain small employers meet the medical care costs of the account holder, the account holder's spouse, or the account holder's dependent(s). Amend 2011 federal return After December 31, 2007, you cannot be treated as an eligible individual for Archer MSA purposes unless: You were an active participant for any tax year ending before January 1, 2008, or You became an active participant for a tax year ending after December 31, 2007, by reason of coverage under a high deductible health plan (HDHP) of an Archer MSA participating employer. Amend 2011 federal return A Medicare Advantage MSA is an Archer MSA designated by Medicare to be used solely to pay the qualified medical expenses of the account holder who is eligible for Medicare. Amend 2011 federal return Archer MSAs An Archer MSA is a tax-exempt trust or custodial account that you set up with a U. Amend 2011 federal return S. Amend 2011 federal return financial institution (such as a bank or an insurance company) in which you can save money exclusively for future medical expenses. Amend 2011 federal return What are the benefits of an Archer MSA?   You may enjoy several benefits from having an Archer MSA. Amend 2011 federal return You can claim a tax deduction for contributions you make even if you do not itemize your deductions on Form 1040 or Form 1040NR. Amend 2011 federal return The interest or other earnings on the assets in your Archer MSA are tax free. Amend 2011 federal return Distributions may be tax free if you pay qualified medical expenses. Amend 2011 federal return See Qualified medical expenses , later. Amend 2011 federal return The contributions remain in your Archer MSA from year to year until you use them. Amend 2011 federal return An Archer MSA is “portable” so it stays with you if you change employers or leave the work force. Amend 2011 federal return Qualifying for an Archer MSA To qualify for an Archer MSA, you must be either of the following. Amend 2011 federal return An employee (or the spouse of an employee) of a small employer (defined later) that maintains a self-only or family HDHP for you (or your spouse). Amend 2011 federal return A self-employed person (or the spouse of a self-employed person) who maintains a self-only or family HDHP. Amend 2011 federal return You can have no other health or Medicare coverage except what is permitted under Other health coverage , later. Amend 2011 federal return You must be an eligible individual on the first day of a given month to get an Archer MSA deduction for that month. Amend 2011 federal return If another taxpayer is entitled to claim an exemption for you, you cannot claim a deduction for an Archer MSA contribution. Amend 2011 federal return This is true even if the other person does not actually claim your exemption. Amend 2011 federal return Small employer. Amend 2011 federal return   A small employer is generally an employer who had an average of 50 or fewer employees during either of the last 2 calendar years. Amend 2011 federal return The definition of small employer is modified for new employers and growing employers. Amend 2011 federal return Growing employer. Amend 2011 federal return   A small employer may begin HDHPs and Archer MSAs for his or her employees and then grow beyond 50 employees. Amend 2011 federal return The employer will continue to meet the requirement for small employers if he or she: Had 50 or fewer employees when the Archer MSAs began, Made a contribution that was excludable or deductible as an Archer MSA for the last year he or she had 50 or fewer employees, and Had an average of 200 or fewer employees each year after 1996. Amend 2011 federal return Changing employers. Amend 2011 federal return   If you change employers, your Archer MSA moves with you. Amend 2011 federal return However, you may not make additional contributions unless you are otherwise eligible. Amend 2011 federal return High deductible health plan (HDHP). Amend 2011 federal return   To be eligible for an Archer MSA, you must be covered under an HDHP. Amend 2011 federal return An HDHP has: A higher annual deductible than typical health plans, and A maximum limit on the annual out-of-pocket medical expenses that you must pay for covered expenses. Amend 2011 federal return Limits. Amend 2011 federal return   The following table shows the limits for annual deductibles and the maximum out-of-pocket expenses for HDHPs for 2013. Amend 2011 federal return   Self-only coverage Family coverage Minimum annual deductible $2,150 $4,300 Maximum annual deductible $3,200 $6,450 Maximum annual out-of-pocket expenses $4,300 $7,850 Family plans that do not meet the high deductible rules. Amend 2011 federal return   There are some family plans that have deductibles for both the family as a whole and for individual family members. Amend 2011 federal return Under these plans, if you meet the individual deductible for one family member, you do not have to meet the higher annual deductible amount for the family. Amend 2011 federal return If either the deductible for the family as a whole or the deductible for an individual family member is less than the minimum annual deductible for family coverage, the plan does not qualify as an HDHP. Amend 2011 federal return Example. Amend 2011 federal return You have family health insurance coverage in 2013. Amend 2011 federal return The annual deductible for the family plan is $5,500. Amend 2011 federal return This plan also has an individual deductible of $2,000 for each family member. Amend 2011 federal return The plan does not qualify as an HDHP because the deductible for an individual family member is less than the minimum annual deductible ($4,300) for family coverage. Amend 2011 federal return Other health coverage. Amend 2011 federal return   You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not an HDHP. Amend 2011 federal return However, you can still be an eligible individual even if your spouse has non-HDHP coverage provided you are not covered by that plan. Amend 2011 federal return However, you can have additional insurance that provides benefits only for the following items. Amend 2011 federal return Liabilities incurred under workers' compensation laws, torts, or ownership or use of property. Amend 2011 federal return A specific disease or illness. Amend 2011 federal return A fixed amount per day (or other period) of hospitalization. Amend 2011 federal return You can also have coverage (whether provided through insurance or otherwise) for the following items. Amend 2011 federal return Accidents. Amend 2011 federal return Disability. Amend 2011 federal return Dental care. Amend 2011 federal return Vision care. Amend 2011 federal return Long-term care. Amend 2011 federal return Contributions to an MSA Contributions to an Archer MSA must be made in cash. Amend 2011 federal return You cannot contribute stock or other property to an Archer MSA. Amend 2011 federal return Who can contribute to my Archer MSA?   If you are an employee, your employer may make contributions to your Archer MSA. Amend 2011 federal return (You do not pay tax on these contributions. Amend 2011 federal return ) If your employer does not make contributions to your Archer MSA, or you are self-employed, you can make your own contributions to your Archer MSA. Amend 2011 federal return Both you and your employer cannot make contributions to your Archer MSA in the same year. Amend 2011 federal return You do not have to make contributions to your Archer MSA every year. Amend 2011 federal return    If your spouse is covered by your HDHP and an excludable amount is contributed by your spouse's employer to an Archer MSA belonging to your spouse, you cannot make contributions to your own Archer MSA that year. Amend 2011 federal return Limits There are two limits on the amount you or your employer can contribute to your Archer MSA: The annual deductible limit. Amend 2011 federal return An income limit. Amend 2011 federal return Annual deductible limit. Amend 2011 federal return   You (or your employer) can contribute up to 75% of the annual deductible of your HDHP (65% if you have a self-only plan) to your Archer MSA. Amend 2011 federal return You must have the HDHP all year to contribute the full amount. Amend 2011 federal return If you do not qualify to contribute the full amount for the year, determine your annual deductible limit by using the worksheet in the Instructions for Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. Amend 2011 federal return Example 1. Amend 2011 federal return You have an HDHP for your family all year in 2013. Amend 2011 federal return The annual deductible is $5,000. Amend 2011 federal return You can contribute up to $3,750 ($5,000 × 75%) to your Archer MSA for the year. Amend 2011 federal return Example 2. Amend 2011 federal return You have an HDHP for your family for the entire months of July through December 2013 (6 months). Amend 2011 federal return The annual deductible is $5,000. Amend 2011 federal return You can contribute up to $1,875 ($5,000 × 75% ÷ 12 × 6) to your Archer MSA for the year. Amend 2011 federal return If you and your spouse each have a family plan, you are treated as having family coverage with the lower annual deductible of the two health plans. Amend 2011 federal return The contribution limit is split equally between you unless you agree on a different division. Amend 2011 federal return Income limit. Amend 2011 federal return   You cannot contribute more than you earned for the year from the employer through whom you have your HDHP. Amend 2011 federal return   If you are self-employed, you cannot contribute more than your net self-employment income. Amend 2011 federal return This is your income from self-employment minus expenses (including the deductible part of self-employment tax). Amend 2011 federal return Example 1. Amend 2011 federal return Noah Paul earned $25,000 from ABC Company in 2013. Amend 2011 federal return Through ABC, he had an HDHP for his family for the entire year. Amend 2011 federal return The annual deductible was $5,000. Amend 2011 federal return He can contribute up to $3,750 to his Archer MSA (75% × $5,000). Amend 2011 federal return He can contribute the full amount because he earned more than $3,750 at ABC. Amend 2011 federal return Example 2. Amend 2011 federal return Westley Lawrence is self-employed. Amend 2011 federal return He had an HDHP for his family for the entire year in 2013. Amend 2011 federal return The annual deductible was $5,000. Amend 2011 federal return Based on the annual deductible, the maximum contribution to his Archer MSA would have been $3,750 (75% × $5,000). Amend 2011 federal return However, after deducting his business expenses, Joe's net self-employment income is $2,500 for the year. Amend 2011 federal return Therefore, he is limited to a contribution of $2,500. Amend 2011 federal return Individuals enrolled in Medicare. Amend 2011 federal return   Beginning with the first month you are enrolled in Medicare, you cannot contribute to an Archer MSA. Amend 2011 federal return However, you may be eligible for a Medicare Advantage MSA, discussed later. Amend 2011 federal return When To Contribute You can make contributions to your Archer MSA for 2013 until April 15, 2014. Amend 2011 federal return Reporting Contributions on Your Return Report all contributions to your Archer MSA on Form 8853 and file it with your Form 1040 or Form 1040NR. Amend 2011 federal return You should include all contributions you, or your employer, made for 2013, including those made by April 15, 2014, that are designated for 2013. Amend 2011 federal return You should receive Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, from the trustee showing the amount you (or your employer) contributed during the year. Amend 2011 federal return Your employer's contributions should be shown in box 12 of Form W-2, Wage and Tax Statement, with code R. Amend 2011 federal return Follow the instructions for Form 8853 and complete the worksheet in the instructions. Amend 2011 federal return Report your Archer MSA deduction on Form 1040 or Form 1040NR. Amend 2011 federal return Excess contributions. Amend 2011 federal return   You will have excess contributions if the contributions to your Archer MSA for the year are greater than the limits discussed earlier. Amend 2011 federal return Excess contributions are not deductible. Amend 2011 federal return Excess contributions made by your employer are included in your gross income. Amend 2011 federal return If the excess contribution is not included in box 1 of Form W-2, you must report the excess as “Other income” on your tax return. Amend 2011 federal return   Generally, you must pay a 6% excise tax on excess contributions. Amend 2011 federal return See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. Amend 2011 federal return The excise tax applies to each tax year the excess contribution remains in the account. Amend 2011 federal return   You may withdraw some or all of the excess contributions and not pay the excise tax on the amount withdrawn if you meet the following conditions. Amend 2011 federal return You withdraw the excess contributions by the due date, including extensions, of your tax return. Amend 2011 federal return You withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings. Amend 2011 federal return Deducting an excess contribution in a later year. Amend 2011 federal return   You may be able to deduct excess contributions for previous years that are still in your Archer MSA. Amend 2011 federal return The excess contribution you can deduct in the current year is the lesser of the following two amounts. Amend 2011 federal return Your maximum Archer MSA contribution limit for the year minus any amounts contributed to your Archer MSA for the year. Amend 2011 federal return The total excess contributions in your Archer MSA at the beginning of the year. Amend 2011 federal return   Any excess contributions remaining at the end of a tax year are subject to the excise tax. Amend 2011 federal return See Form 5329. Amend 2011 federal return Distributions From an MSA You will generally pay medical expenses during the year without being reimbursed by your HDHP until you reach the annual deductible for the plan. Amend 2011 federal return When you pay medical expenses during the year that are not reimbursed by your HDHP, you can ask the trustee of your Archer MSA to send you a distribution from your Archer MSA. Amend 2011 federal return You can receive tax-free distributions from your Archer MSA to pay for qualified medical expenses (discussed later). Amend 2011 federal return If you receive distributions for other reasons, the amount will be subject to income tax and may be subject to an additional 20% tax as well. Amend 2011 federal return You do not have to make withdrawals from your Archer MSA each year. Amend 2011 federal return If you no longer qualify to make contributions, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses. Amend 2011 federal return A distribution is money you get from your Archer MSA. Amend 2011 federal return The trustee will report any distribution to you and the IRS on Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. Amend 2011 federal return Qualified medical expenses. Amend 2011 federal return   Qualified medical expenses are those expenses that would generally qualify for the medical and dental expenses deduction. Amend 2011 federal return These are explained in Publication 502. Amend 2011 federal return   Also, non-prescription medicines (other than insulin) are not considered qualified medical expenses for MSA purposes. Amend 2011 federal return A medicine or drug will be a qualified medical expense for MSA purposes only if the medicine or drug: Requires a prescription, Is available without a prescription (an over-the-counter medicine or drug) and you get a prescription for it, or Is insulin. Amend 2011 federal return   Qualified medical expenses are those incurred by the following persons. Amend 2011 federal return You and your spouse. Amend 2011 federal return All dependents you claim on your tax return. Amend 2011 federal return Any person you could have claimed as a dependent on your return except that: The person filed a joint return, The person had gross income of $3,900 or more, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Amend 2011 federal return    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. Amend 2011 federal return    You cannot deduct qualified medical expenses as an itemized deduction on Schedule A (Form 1040) that are equal to the tax-free distribution from your Archer MSA. Amend 2011 federal return Special rules for insurance premiums. Amend 2011 federal return   Generally, you cannot treat insurance premiums as qualified medical expenses for Archer MSAs. Amend 2011 federal return You can, however, treat premiums for long-term care coverage, health care coverage while you receive unemployment benefits, or health care continuation coverage required under any federal law as qualified medical expenses for Archer MSAs. Amend 2011 federal return Health coverage tax credit. Amend 2011 federal return   You cannot claim this credit for premiums that you pay with a tax-free distribution from your Archer MSA. Amend 2011 federal return See Publication 502 for information on this credit. Amend 2011 federal return Deemed distributions from Archer MSAs. Amend 2011 federal return   The following situations result in deemed taxable distributions from your Archer MSA. Amend 2011 federal return You engaged in any transaction prohibited by section 4975 with respect to any of your Archer MSAs at any time in 2013. Amend 2011 federal return Your account ceases to be an Archer MSA as of January 1, 2013, and you must include the fair market value of all assets in the account as of January 1, 2013, on Form 8853. Amend 2011 federal return You used any portion of any of your Archer MSAs as security for a loan at any time in 2013. Amend 2011 federal return You must include the fair market value of the assets used as security for the loan as income on Form 1040 or Form 1040NR. Amend 2011 federal return   Examples of prohibited transactions include the direct or indirect: Sale, exchange, or leasing of property between you and the Archer MSA, Lending of money between you and the Archer MSA, Furnishing goods, services, or facilities between you and the Archer MSA, and Transfer to or use by you, or for your benefit, of any assets of the Archer MSA. Amend 2011 federal return   Any deemed distribution will not be treated as used to pay qualified medical expenses. Amend 2011 federal return These distributions are included in your income and are subject to the additional 20% tax, discussed later. Amend 2011 federal return Recordkeeping. Amend 2011 federal return You must keep records sufficient to show that: The distributions were exclusively to pay or reimburse qualified medical expenses, The qualified medical expenses had not been previously paid or reimbursed from another source, and The medical expenses had not been taken as an itemized deduction in any year. Amend 2011 federal return Do not send these records with your tax return. Amend 2011 federal return Keep them with your tax records. Amend 2011 federal return Reporting Distributions on Your Return How you report your distributions depends on whether or not you use the distribution for qualified medical expenses (defined earlier). Amend 2011 federal return If you use a distribution from your Archer MSA for qualified medical expenses, you do not pay tax on the distribution but you have to report the distribution on Form 8853. Amend 2011 federal return Follow the instructions for the form and file it with your Form 1040 or Form 1040NR. Amend 2011 federal return If you do not use a distribution from your Archer MSA for qualified medical expenses, you must pay tax on the distribution. Amend 2011 federal return Report the amount on Form 8853 and file it with your Form 1040 or Form 1040NR. Amend 2011 federal return You may have to pay an additional 20% tax, discussed later, on your taxable distribution. Amend 2011 federal return If an amount (other than a rollover) is contributed to your Archer MSA this year (by you or your employer), you also must report and pay tax on a distribution you receive from your Archer MSA this year that is used to pay medical expenses of someone who is not covered by an HDHP, or is also covered by another health plan that is not an HDHP, at the time the expenses are incurred. Amend 2011 federal return Rollovers. Amend 2011 federal return   Generally, any distribution from an Archer MSA that you roll over into another Archer MSA or an HSA is not taxable if you complete the rollover within 60 days. Amend 2011 federal return An Archer MSA and an HSA can only receive one rollover contribution during a 1-year period. Amend 2011 federal return See the Form 8853 instructions for more information. Amend 2011 federal return Additional tax. Amend 2011 federal return   There is a 20% additional tax on the part of your distributions not used for qualified medical expenses. Amend 2011 federal return Figure the tax on Form 8853 and file it with your Form 1040 or Form 1040NR. Amend 2011 federal return Report the additional tax in the total on Form 1040 or Form 1040NR. Amend 2011 federal return Exceptions. Amend 2011 federal return   There is no additional tax on distributions made after the date you are disabled, reach age 65, or die. Amend 2011 federal return Balance in an Archer MSA An Archer MSA is generally exempt from tax. Amend 2011 federal return You are permitted to take a distribution from your Archer MSA at any time; however, only those amounts used exclusively to pay for qualified medical expenses are tax free. Amend 2011 federal return Amounts that remain at the end of the year are generally carried over to the next year (see Excess contributions , earlier). Amend 2011 federal return Earnings on amounts in an Archer MSA are not included in your income while held in the Archer MSA. Amend 2011 federal return Death of the Archer MSA Holder You should choose a beneficiary when you set up your Archer MSA. Amend 2011 federal return What happens to that Archer MSA when you die depends on whom you designate as the beneficiary. Amend 2011 federal return Spouse is the designated beneficiary. Amend 2011 federal return   If your spouse is the designated beneficiary of your Archer MSA, it will be treated as your spouse's Archer MSA after your death. Amend 2011 federal return Spouse is not the designated beneficiary. Amend 2011 federal return   If your spouse is not the designated beneficiary of your Archer MSA: The account stops being an Archer MSA, and The fair market value of the Archer MSA becomes taxable to the beneficiary in the year in which you die. Amend 2011 federal return   If your estate is the beneficiary, the fair market value of the Archer MSA will be included on your final income tax return. Amend 2011 federal return The amount taxable to a beneficiary other than the estate is reduced by any qualified medical expenses for the decedent that are paid by the beneficiary within 1 year after the date of death. Amend 2011 federal return Filing Form 8853 You must file Form 8853 with your Form 1040 or Form 1040NR if you (or your spouse, if married filing a joint return) had any activity in your Archer MSA during the year. Amend 2011 federal return You must file the form even if only your employer or your spouse's employer made contributions to the Archer MSA. Amend 2011 federal return If, during the tax year, you are the beneficiary of two or more Archer MSAs or you are a beneficiary of an Archer MSA and you have your own Archer MSA, you must complete a separate Form 8853 for each MSA. Amend 2011 federal return Enter “statement” at the top of each Form 8853 and complete the form as instructed. Amend 2011 federal return Next, complete a controlling Form 8853 combining the amounts shown on each of the statement Forms 8853. Amend 2011 federal return Attach the statements to your tax return after the controlling Form 8853. Amend 2011 federal return Employer Participation This section contains the rules that employers must follow if they decide to make Archer MSAs available to their employees. Amend 2011 federal return Unlike the previous discussions, “you” refers to the employer and not to the employee. Amend 2011 federal return Health plan. Amend 2011 federal return   If you want your employees to be able to have an Archer MSA, you must make an HDHP available to them. Amend 2011 federal return You can provide no additional coverage other than those exceptions listed previously under Other health coverage . Amend 2011 federal return Contributions. Amend 2011 federal return   You can make contributions to your employees' Archer MSAs. Amend 2011 federal return You deduct the contributions on the “Employee benefit programs” line of your business income tax return for the year in which you make the contributions. Amend 2011 federal return If you are filing Form 1040, Schedule C, this is Part II, line 14. Amend 2011 federal return Comparable contributions. Amend 2011 federal return   If you decide to make contributions, you must make comparable contributions to all comparable participating employees' Archer MSAs. Amend 2011 federal return Your contributions are comparable if they are either: The same amount, or The same percentage of the annual deductible limit under the HDHP covering the employees. Amend 2011 federal return Comparable participating employees. Amend 2011 federal return   Comparable participating employees: Are covered by your HDHP and are eligible to establish an Archer MSA, Have the same category of coverage (either self-only or family coverage), and Have the same category of employment (either part-time or full-time). Amend 2011 federal return Excise tax. Amend 2011 federal return   If you made contributions to your employees' Archer MSAs that were not comparable, you must pay an excise tax of 35% of the amount you contributed. Amend 2011 federal return Employment taxes. Amend 2011 federal return   Amounts you contribute to your employees' Archer MSAs are generally not subject to employment taxes. Amend 2011 federal return You must report the contributions in box 12 of the Form W-2 you file for each employee. Amend 2011 federal return Enter code “R” in box 12. Amend 2011 federal return Medicare Advantage MSAs A Medicare Advantage MSA is an Archer MSA designated by Medicare to be used solely to pay the qualified medical expenses of the account holder. Amend 2011 federal return To be eligible for a Medicare Advantage MSA, you must be enrolled in Medicare and have a high deductible health plan (HDHP) that meets the Medicare guidelines. Amend 2011 federal return A Medicare Advantage MSA is a tax-exempt trust or custodial savings account that you set up with a financial institution (such as a bank or an insurance company) in which the Medicare program can deposit money for qualified medical expenses. Amend 2011 federal return The money in your account is not taxed if it is used for qualified medical expenses, and it may earn interest or dividends. Amend 2011 federal return An HDHP is a special health insurance policy that has a high deductible. Amend 2011 federal return You choose the policy you want to use as part of your Medicare Advantage MSA plan. Amend 2011 federal return However, the policy must be approved by the Medicare program. Amend 2011 federal return Medicare Advantage MSAs are administered through the federal Medicare program. Amend 2011 federal return You can get information by calling 1-800-Medicare (1-800-633-4227) or through the Internet at www. Amend 2011 federal return medicare. Amend 2011 federal return gov. Amend 2011 federal return Note. Amend 2011 federal return You must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your tax return if you have a Medicare Advantage MSA. Amend 2011 federal return Flexible Spending Arrangements (FSAs) A health flexible spending arrangement (FSA) allows employees to be reimbursed for medical expenses. Amend 2011 federal return FSAs are usually funded through voluntary salary reduction agreements with your employer. Amend 2011 federal return No employment or federal income taxes are deducted from your contribution. Amend 2011 federal return The employer may also contribute. Amend 2011 federal return Note. Amend 2011 federal return Unlike HSAs or Archer MSAs which must be reported on Form 1040 or Form 1040NR, there are no reporting requirements for FSAs on your income tax return. Amend 2011 federal return For information on the interaction between a health FSA and an HSA, see Other employee health plans under Qualifying for an HSA, earlier. Amend 2011 federal return What are the benefits of an FSA?   You may enjoy several benefits from having an FSA. Amend 2011 federal return Contributions made by your employer can be excluded from your gross income. Amend 2011 federal return No employment or federal income taxes are deducted from the contributions. Amend 2011 federal return Withdrawals may be tax free if you pay qualified medical expenses. Amend 2011 federal return See Qualified medical expenses , later. Amend 2011 federal return You can withdraw funds from the account to pay qualified medical expenses even if you have not yet placed the funds in the account. Amend 2011 federal return Qualifying for an FSA Health FSAs are employer-established benefit plans. Amend 2011 federal return These may be offered in conjunction with other employer-provided benefits as part of a cafeteria plan. Amend 2011 federal return Employers have complete flexibility to offer various combinations of benefits in designing their plan. Amend 2011 federal return You do not have to be covered under any other health care plan to participate. Amend 2011 federal return Self-employed persons are not eligible for an FSA. Amend 2011 federal return Certain limitations may apply if you are a highly compensated participant or a key employee. Amend 2011 federal return Contributions to an FSA You contribute to your FSA by electing an amount to be voluntarily withheld from your pay by your employer. Amend 2011 federal return This is sometimes called a salary reduction agreement. Amend 2011 federal return The employer may also contribute to your FSA if specified in the plan. Amend 2011 federal return You do not pay federal income tax or employment taxes on the salary you contribute or the amounts your employer contributes to the FSA. Amend 2011 federal return However, contributions made by your employer to provide coverage for long-term care insurance must be included in income. Amend 2011 federal return When To Contribute At the