Well, as tax time is approaching, I’,m starting to think of some of my questions. Here’s the first. I haven’t gotten any kind of a 1099 yet from the bank that holds my HSA yet (I suppose I wouldn’t have, I’m kinda jumping the gut here), and that may answer my question, but I’ll ask anyways. My employer puts $1800 towards my HSA each year. My HSA can have a total of $2200 worth of deposits each year. I plan to put in $7.00 each week (for a total of $364 per year). So my question(s) is, how does this normally work. Do people normally send the money to the bank themselves (or hand a check for deposit to their employer) and then claim that as a deduction at the end of the year? See, at work I do payroll. I was planning on simply making the deduction directly out of my check PRE-tax and then sending it along with the HSA deposit each month. But then I was thinking, if this isn’t how most people do it, then when it comes time to do taxes at the end of the year, I’m going to have to NOT claim it. Since if I DO claim it, I’ll wind up taking the deduction twice.
My experience is pretty limited at this point, but I think the norm will be to have the employer taking the deduction as a pre-tax item and forwarding the money to the HSA custodian. If you want to make the deposits yourself, you can. You’ll need to remember to take the deduction on your 1040 when you file your taxes for the year. If the employer is making the deposits, they’ll reflect that on your W2.
One other thing to consider, since you’re allowed to make the contribtuions yourself and deduct them, you don’t have to use the HSA custodian your employer brings to the table. Since in your case, the company is making contributions to the HSA, it’s probably simpler to have everything in one place. But if there are no company contribtuions and the HSA arrangement your employer offers has high fees or crappy investments, shop around and find your own custodian.
You should only receive a 1099 if you took a distribution from the HSA during the year.