If you have a Health Savings Account (HSA), here’s some interesting news: you can make HSA contributions for the previous year before the tax deadline!
Does that sound too good to be true? As outlined in IRS publication 969, it is true.
The IRS allows for a significant amount of flexibility when it comes to HSA contributions. If you were enrolled in an HSA and a high deductible health plan (HDHP) in 2018, you can make contributions to your HSA up until April 15, 2019.
So, if you were unable to contribute during the calendar year, you could make up those until the tax deadline. It’s essentially a 15 1/2-month contribution window.
There are a couple of benefits to making HSA contributions for last year.
First, you can decrease your tax burden. HSA contributions are not taxed. As you prepare your taxes, if you find that you have a tax burden for last year, making HSA contributions can provide some relief.
Second, you can add a little cushion to your account balance. If you were unable to contribute the full annual election for last year, you can make up for that and build up your balance. This is especially important because you can only spend what’s in your account. Plus, it doesn’t affect this year’s contributions.
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, take advantage of this HSA tax “loophole.” Your wallet will thank you for it.