You make the call

Question: Sherri and Chris were talking about year-end tax savings when Chris mentioned that she has a Health Savings Account (HSA) in conjunction with the high deductible health plan (HDHP) offered by her employer. Of her 2024 $4,150 maximum allowable contribution, she has thus far only contributed $2,150 through payroll deductions. Now, in November, she has extra cash in hand and regrets her earlier annual election amount. Sherri says, “I have a remedy for that, Chris. You can contribute to the HSA from out-of-pocket, rather than through wages, and get a tax deduction if you contribute before April 15, 2025.” Is Sherri correct?

Answer: Yes, as an eligible individual for the entire tax year, Chris can contribute the additional $2,000 shortfall to reach the $4,150 maximum for 2024. Anyone can contribute to an eligible individual’s HSA. For an employee’s HSA, the employee, employer or both may contribute to the employee’s HSA in the same year.

Using Part I of Form 8889, Health Savings Accounts (HSAs), to figure the deduction, Chris will ultimately realize the deduction amount on Schedule 1 (Form 1040), Part II Line 13, if contributed before April 15, 2025.