A commonly used tax savings strategy is done when an individual or employer makes a contribution to a Health Savings Account (HSA). Luckily, as an individual or employer, you still have time to make a contribution after December 31st to an HSA. For example, a contribution made into your HSA in 2017 might be deductible on your 2016 income tax return. The following information summarizes some key facts about the timing, deductibility, and contribution limits of HSAs:
- For 2016, eligible individuals can contribute up to $3,350 if you have a self-only High Deductible Health Plan (HDHP). If you have a family HDHP you can contribute up to $6,750.
- For 2016, 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.
- HSA contributions must be made by the due date (not including extensions) for filing your federal income tax return for the year.
- An employer can make contributions to your HSA between January 1, 2017 and April 18, 2017 for the year that are allocated to your federal income tax return for 2016. Your employer must notify you and the trustee of your HSA that the contribution is for 2016. The contribution will be reported on your 2016 Form W-2.