Maxing Out Your 2019 HSA Contributions

Due to the COVID-19 crisis, the official federal tax filing deadline has been moved from the traditional April 15 date to July 15, 2020. This means you will also now have an extra three months to max out on your 2019 HSA contribution, which will enable you to take advantage of three valuable tax breaks.

While you now have until the middle of July 2020 to top off your 2019 HSA contributions, you can also make your 2020 tax-year contributions as well.

2019 Maximum HSA contributions

Typically you have from January 1 of a given calendar year until April 15th of the following calendar year to maximize your HSA contributions for a given year. For example, for the 2019 tax year under the normal rules you had from January 1, 2019 through April 15, 2020 to max out your 2019 HSA contribution.

Because of the coronavirus crisis, the IRS has extended the general tax-filing deadline for three months, as well as HSA contribution deadlines. If you haven’t already hit your 2019 tax-year HSA contribution limit, you now have until July 15, 2020 to add to your 2019 contributions.

2019 tax-year HSA contribution limits:

• $3,500 if your high-deductible health plan (HDHP) only covered you.
• $7,000 if your HDHP was for family coverage.

Note: If you are at least 55 years old you are allowed to make an additional $1,000 HSA “catch-up” contribution to your HSA.

Even though you are technically making the contribution in 2020, if you designate the money as a 2019 tax-year contribution, you will be able to claim the contribution as a tax deduction on your 2019 tax-year return.

Once the money is in your HSA you can use it to pay qualified medical expenses at any time, without owing any tax on your withdrawal. (See what qualified medical expenses you can pay with tax-free dollars from your HSA.) That might be some bills for this year, or you can leave the money in your HSA to use next year, or decades from now. There is no annual use-it-or-lose it rule with HSAs.

Having tax-free dollars to pay for qualified medical expenses may be especially helpful if you are concerned about a job loss or reduced income as the economy struggles during the coronavirus outbreak.

2020 Maximum HSA contributions

If you are currently enrolled in a HDHP for 2020 you can also make your 2020 contributions. The current deadline for making 2020 tax-year HSA contributions is April 15, 2021.

The maximum you can contribute to an HSA for the 2020 tax year is slightly more than the maximum 2019 limits.

2020 tax-year HSA contribution limits:

• $3,550 if your high-deductible health plan (HDHP) only covered you.
• $7,100 if your HDHP was for family coverage.

If you are at least 55 years old you are allowed to make an additional $1,000 “catch-up” contribution.