Health Savings Account-Health Savings Account Info

Michael asked:


George and Martha Jones need help.

They provide the following information:
1.George is 45 yrs old, Martha is 39. They live in Salisbury, Md. George was married before(his first wife died when he was 30 yrs old) and he has two children from the prior marriage- Jeffrey who is 21 yrs old and in his last year of college, and Jean, who is 17 years old and in her last year of high school. Jeffrey wants to go to grad school at Univ of Maryland to earn his MBA, and Jean wants to go to Salisbury University, and may also want to continue on to graduate school.
2.George and Martha have been married for 10 years. This is Martha’s first marriage. They have two children together- Linda who is 7 years old, and Louie who is 5 years old.
3.Martha is a stay-at-home Mom, but has recently started a home-based business selling used clothing on eBay. Her net income is about $300 per month, but she is excited about the business and thinks it will grow bigger over the years.
4.George is a partner in an engineering consulting firm, which he has started with 2 other colleagues three years ago. It is doing extremely well. Last year the business has a gross income of $600,000 and their year it should be gross close to $900,000. Each partner’s individual income comes to about 1/3 their share of half of the business gross income. George and his other partners are very talented engineers, but unfortunately they are not great businessmen and have not taken the time to have any legal documents drawn up, other than a very basic general partnership agreement, which provides that all 3 partners share equally in the profits and expenses.
5.George and Martha own their own home. They purchased it when they got married for $300,000 and it is now worth $600,000. They have a mortgage balance of $100,000. The other assets are:
a.A checking account- $5000
b.2 savings accounts- $100,000 each
c.An investment account made up of stocks and bonds and mutual funds- $300,000
d.George’s IRA- $250,000
e.A vacation condo in North Carolina worth $175,000
f.2 vehicles- one worth $15,000 and one worth $25,000
g.Miscellaneous furniture and furnishings, which include valuable antiques appraised at $75,000
h.A house in Virginia that George and his brother Jim, inherited from their parents, worthy $250,000 with no mortgage
i.The condo in Salisbury that George owned prior to his marriage with Martha, which is now being rented out. The condo is worth $175,000

6.George has a whole life insurance policy with a face value of $1,000,000. Martha is the primary beneficiary, and his four children are the successor beneficiaries.
7.Martha has a whole life insurance policy with a value face of $50,000. George is a primary beneficiary, and Linda and Louie are the successor beneficiaries.
Both George and Martha trust each other to take care of the other’s health and financial affairs while they are alive.
After George dies, if Martha is still alive, he wants to make sure she is provided for. However, he also wants to make sure that his children from the prior marriage are provided for as equally as Linda and Louie. In the short-term, he especially wants to assist Jeff and Jean with their medical expenses.
After Martha dies, if George is still alive, she wants to make sure that he is provided for, and wants Louie and Linda provided for on an equal basis if George is not alive. Martha also has a sister, Rose, who is autistic. Rose lives in a group home and is receiving government assistance, and Martha is her legal Guardian. Martha wants to make certain that Rose will eb cared for and provided for if Martha predeceases Rose, but does not want to do anything to interfere with Rose’s government assistance. George is in agreement with this.

Using the above facts, devise an estate plan for George and Martha. Include the following:

1.List specifically the information you need to elicit in addition to the above facts, and the information received. You must not change the above facts, but you can add additional facts based on the questions you need to ask.
2.Specifically describe the types of documents you think George and Martha would need, and might want, in order to make sure their interests are protected while they are alive, and after each passes away. Include the people George and Martha will need to designate to carry this out. Make sure to cover all personal healthcare, family, business, tax, probate, and other inheritance matters. Include in your description the particulars of what you would propose to assure that George and Martha’s stated goals will be carried out.
3.In developing your plan, specify all relevant tax aspects and consequences of which George and Martha will need to be aware of, and your proposals for tax-savings.

Alexia Kruszewski

Monique B asked:


I opted for a “Healthcare Flexible Spending Account” through my employer. I am now doing my taxes and am being asked if I had a Health Savings Account. Are these two items the same?
Thanks – after some quick research online, I realized that they were different. Good too because that makes my taxes easier!

Kimberlee Cripe

K K asked:


I received a 1099-SA from my HSA(health Saving Account) bank. In box 1, there is about $500 listed as 2010 gross distribution.Following the instruction of my Tax software, I typed in the amount and resulted in an increase in my 2010 income tax due….I used my HSA account only for medical treatment and prescriptions. Why do i have to report the $500 as an income and subject to income tax??? I am confused…

Dane Raider

MATADOR asked:


I am planning on having surgery out of the country, since the surgery in US is too expensive, I am thinking to use the money I had saved in my retirement account( IRA) .
Can I use this money without paying a penalty?
Since is for health reasons.
Does it matter that the surgery will be performed in another country?

Kermit Mclearan

plantRancher asked:


what are the pro’s/con’s…

What is tax deductible and what is not?

ect…the gov. link is very generic and useless…need some-one to explain in much greater detail!

Yes…already know…must have health insurance w/high deductible..but after that it is FUZZY!

Does it carry over from year-to-year if you don’t tap into it?

what are penalty’s for w/draw….if not for health?

how much can you write off for tax purpose’s?

Jamie Mullinix

Lynda asked:


thank you

Alaine Mangum

David A asked:


I live in Wisconsin do I have to pay federal tax on HSA contributions for the year ? How about state tax ?

Denny Benchoff

Marcos asked:


Ok sso this is the first year filing taxes by myself and was wondering which tax statements should i still wait for before filing?

I already received my W2 form from my employer, tax statement from my University/College… but im also wondering since i have applied with the FAFSA for financial aid, should i wait for a tax statement from them? Although this financial aid amount is already listen somewhere in the school’s tax statement i received. Also i applied for a student loan with Sallie Mae on that same school, how about a tax statement from them, although my loan is in defferal but is accruing interest over time until i start paying it back.
Also i have applied for a Federal Credit Union and they have given me no more than 10dollars since i’ve opened that saving account, as i’ve read earning more than that amount in interest will have to wait for a different tax statement from them. Also have AETNA health insurance through my employer and have used it since, tax statement from them?

So, sofar its W2 and College tax statement that i have.
Which others would i have to wait for considering the above mentioned.

Scottie Ober

snapshot8d asked:


I’d like to make a withdrawal from my Health Saving account, but I will have to pay taxes (as income) if the money is not for health expenses. If I replace that money before the end of the year, do I have to pay those taxes?

Ezra Alexandropoul

SM S asked:


I have signed up for HSA, I have both employer and employee contribution to this account. Questions:

1) In my W2, Box 12, the code is “W”, the amount is $500. Is this the employer contrition to HSA or also includes employee contribution?

2) If the $500 is only for employer contibution, is it a taxable income (box 12, code W)? Do I need to report this under any other IRS form?

3) What about employee contribution piece, do I need to report this at all?

4) What about the usage of my HSA account? Does the usage (pay prescription, see Dr, etc) trigger a reportable tax event?

5) Is my employer supposed to issue a 1099-SA form? I did not receive it from my emplyer.

Thanks

James Donaghey