Limit on Contributions (continued)
A taxpayer who cannot use the last-month rule must use the sum of the monthly contribution limits rule to determine the maximum HSA contribution.
Chris, age 53, became an eligible individual on December 1 of the tax year. He has family HDHP coverage on that date. He fully expects to meet the testing period by remaining eligible through December 31 of the following tax year. Under the last-month rule, he can contribute up to the maximum family contribution limit for the current tax year.
Maria, age 48, was an eligible individual with self-only HDHP coverage. She was covered from January through September. She was not an eligible individual for the remaining months of October, November, and December. Use the limitation chart and worksheet in Form 8889 Instructions to calculate her maximum contribution.
Setting up an HSA
While there is no deadline for setting up an HSA, the taxpayer must have HDHP coverage during the year in order to make a contribution. Also, the HSA must be set up with an authorized trustee.
Taxpayers and employers can make contributions to the taxpayer's HSA until the filing deadline without regard to extension. If taxpayers were not eligible individuals for the entire year, they can still make contributions until the filing deadline without regard for extension for the months they were eligible individuals.