Can my parents claim me as a dependent and I still have an HSA?

Forum|Forum|6 years ago
June 7, 2019
3 replies
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I lived with my parents for the first 6 months of the year (they paid for my health insurance provided by the college I went to), then moved out and started a new job and took insurance that gave me a HSA. My parents are claiming me as a dependent. I have contributed money every month from my paycheck to the HSA as a part of this plan, but upon researching it more, it seems that there is a conflict between having a HSA and being a dependent. What should I do/how should I file?

TurboTax Deluxe Online

Best answer by MichaelDC

As a dependent on another tax return, you are not eligible to make contributions to a Health Savings Account (HSA).

Since you are not eligible to contribute to the HSA, any contributions that you made are considered to be excess contributions and will be taxed. The only way to avoid this taxation is to file your own return and not be claimed as a dependent on your parents’ return.

The information reported on your 1099-SA must also be included on your personal return. It cannot be included on your parents’ return since it was issued to you.

[edited 3/27/18 11:37 EST]

MichaelDCAnswer

Employee

As a dependent on another tax return, you are not eligible to make contributions to a Health Savings Account (HSA).

The information reported on your 1099-SA must also be included on your personal return. It cannot be included on your parents’ return since it was issued to you.

[edited 3/27/18 11:37 EST]

maclittle95Author

Thank you! Can I still do this even if I was sent a 1099-SA (ie, do I not report that at all)?

maglib

Employee

[mention://98381179 [mention://98381179 @maclittle95]]
You should discuss the dependent rules with your parents. You said you moved out after 6 months, the dependent child rule requires you live at their home more than half the year which would be 7/3/17, did you move out before day 183? Were you a full time student for at least 5 months of the year? Even if a day in May, you would qualify for the 5 month rule. The next question at hand is did you provide over half your own support costs http://www.irs.gov/pub/irs-pdf/p501.pdf ? It is not calculated by the number of months but total cost for the year, so you may still qualify to claim yourself.

The real question is who should be claiming him in this "transition" year to adulthood. Bottom line is: you two have to agree on who is going to claim his exemption. Using actual costs as determined by the IRS of whom paid over half the support of the individual.

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Carpe-Diem

There is something fundamentally wrong with this tax code or interpretation of the tax code by TurboTax. What the rule suggests is if someone is legitimately a dependent (>5 months residence and >50% support) and then they move out on their own, they aren't entitled to start an HSA. In the latter half of the year, they no longer qualify for their parent's health plan (military anyways) and need to legitimately get and start their own health insurance. We then penalize them for saving any money towards an HSA? That just can't be right and makes no logical sense. Can anyone with a tax background legitimately defend why we would not allow or encourage an HSA to be started in this circumstance?

Dkullbom

We have the turbo tax deluxe. How do we complete the excess contribution form? On our sons return. We seem to be stuck in the loop the our son is being claimed on our return but also has an HSA. Our son was full time student until May20th. He lived in our house all year in 2019 . He was on my insurance through September 2019. He was eligible for his own insurance which is a HDHP with an HSA October 1st.

Cooden

Same here. TT deluxe. Smartcheck is not smart enough to allow for this scenario where child was a student, covered by parent's family plan, graduated in May, started work in 2nd half of the year and does the RIGHT thing to set up an HSA. Even if the child is willing to pay excess tax or withdraw that amount for that half year, TT has no way to handle this, and gets stuck in the endless loop of trying to auto-fill an 8889-T HSA form (bc of the W2 info) then declaring that's an error you can't have an HSA. Would be nice if TT released a bug fix update quickly to simply override this somehow. Meantime, trying to figure out how to do this through TT's manual forms. If can't get far enough with that, may have to skip TT and have child fill out taxes online directly w IRS.

KrisD15

If the child is claimed as a dependent for tax year 2019, and covered by a health insurance policy that is not high deductible (during any of 2019), an HSA cannot be utilized.

Rules for HSA

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