The HSA contributions deadline is April 15, so if you haven't already maxed out your 2023 contributions, you still have a little more time to do so.
HSAs (Health Savings Accounts) offer a tax-efficient way to pay for medical expenses. Since employer contributions aren't included in your taxable income, earnings are tax-free, and distributions are not taxed if you use them to pay qualified medical expenses. You might also qualify for a deduction (or a larger deduction) on your tax return.
HSA contributions deadline
Each year, you have until the tax filing deadline to make HSA contributions for the previous calendar year. So, while you have a little more time to take action, the HSA contributions clock is still ticking.
(Note: The HSA contributions deadline is later for eligible taxpayers in some states with automatic IRS tax deadline extensions due to severe storms and natural disasters.)
HSA contribution limits 2023
- For the 2023 tax year, you can contribute up to $3,850 to an HSA if you have self-only coverage
- If you have family coverage, the max HSA contribution for 2023 is $7,750
- Anyone who was age 55 or older at the end of 2023 can put in an additional $1,000 in "catch up" contributions for the year
However, the contribution limits can be reduced If your employer makes contributions to your HSA that are excludable from your income — including amounts contributed through a cafeteria plan. Those contributions count against your overall contribution limit.
Excess HSA Contributions
If you haven't reached your limit, you might want to think about making an HSA contribution today. But don't go over your HSA limit! There's a 6% penalty on excess HSA contributions. And this penalty applies to each year the excess contribution remains in your account.
What if you contribute too much to your HSA? If you accidentally put too much money in your HSA for 2023, you can withdraw the excess amount and avoid the penalty if you do both of the following:
- Withdraw the excess before the end of the day on Tax Day (April 15).
- Withdraw any income earned on the withdrawn contributions and include the earnings in "Other income" on your 2023 tax return.
If you don't withdraw all your excess contributions, you can apply them toward your 2024 HSA contribution limits. Excess contributions from previous years that are still in your HSA account can be deducted, but the deduction is limited to the lesser of (1) your maximum HSA contribution limit for the year minus any amounts actually contributed for the year, or (2) the total excess contributions in your HSA at the beginning of the year.
How does the HSA deduction work?
As mentioned above, you may be able to deduct your HSA contributions for the 2023 tax year on your current federal income tax return (up to the maximum contribution limit). And you don't have to itemize to claim this tax break. Instead, your contributions are reported as an adjustment to income on Line 13 of Schedule 1 (Form 1040). You also need to submit Form 8889 with your tax return.
So, it might be wise to put more money into your HSA before the 2023 HSA contributions deadline if you haven't already reached the limit. That's especially true if you plan to contribute to the account soon anyway. That way, you'll get that extra deduction for 2023 and save more cap space for 2024 contributions.
There are some limitations, though.
- You can't deduct HSA contributions made by your employer, including pre-tax funds contributed through payroll deductions.
- You also can't claim the deduction if someone else can claim you as a dependent on their tax return.
- Distributions from an IRA that are contributed to your HSA in a direct trustee-to-trustee transfer are not deductible, either.
If you already filed your 2023 tax return, you can file an amended tax return to claim a new or increased HSA deduction if you add more to your account before the deadline. You generally have three years from the date you filed your original return or two years from the date you paid any tax due to file an amended return (whichever date is later). Once the IRS receives your amended return, you can track its status online using the IRS's "Where's My Amended Return?" tool.
