Thanks to the Tax Cuts and Jobs Act (TCJA), inflation-adjusted amounts are now indexed using the Chained Consumer Price Index for All Urban Consumers (C-CPI-U). Because of this, the maximum deductible Health Savings Account (HSA) contribution for taxpayers with family coverage under a High Deductible Health Plan (HDHP) was reduced from $6,900 to $6,850. In a recent Revenue Procedure, the IRS announced that for 2018 taxpayers may treat $6,900 as the annual limitation on deductions under IRC Sec. 223(b)(2)(B) for an individual with family coverage under an HDHP. In addition, the Revenue Procedure instructs taxpayers how to treat a prior distribution based on the $6,850 deduction limit as a mistake and repay the HSA without any tax or reporting consequences. It also clarifies how to treat a distribution of an excess contribution (and earnings) based on the $6,850 deduction limit. Rev. Proc. 2018-27, 2018-20 IRB . Contact the tax professionals at Ketel Thorstenson (KTLLP) with any further questions on Health Savings Accounts (HSA) or Tax Reform effects.
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