Health Savings Account (HSA) owners, here’s some interesting tax news: you can make HSA contributions for the previous year before this year’s tax deadline!
HSA contributions for last year
The IRS allows for a fair amount of flexibility when it comes to HSA contributions, particularly when it comes to contribution deadlines.
For those who were enrolled in an HSA and HDHP in 2018, you have up until April 15, 2019 to make contributions for last year.
That’s a 15.5 month contribution window for HSAs, something that does not apply to other tax-advantaged healthcare benefits like a Flexible Spending Account (FSA).
Benefits of making HSA contributions for last year
There are a couple of benefits to making HSA contributions for last year before the tax deadline.
First, you can lower your tax liability since HSA contributions are not subject to taxes. As you prepare your forms, if you find that you have a tax burden for last year, making HSA contributions can provide some relief.
Second, you can strengthen your HSA balance. If you were unable to contribute the full annual election (or any amount) for last year, you can make up for that. This is especially important because you can use only what is in your account for qualified expenses. Plus, making last year’s contributions doesn’t apply to this year’s contributions.
How to make HSA contributions for last year
If you want to contribute to your HSA for the previous year, contact your HSA administrator. It’s important to remember that you can only contribute up to the maximum annual limit. For 2018, that’s $3,450 for self-only coverage and $6,850 for family coverage. People age 55 and over (in 2018), can make an additional $1,000 contribution.
If you can, make the most of this HSA tax “loophole.” Your wallet and your bank account will thank you for it.