| Scenario 1: Leo Williams |
Interview Notes
- Leo Williams is single and 45 years old.
- Leo works as an IT manager and his Form W-2 shows wages of $47,250.
- Leo participated in his employer’s self-only coverage High Deductible Health Plan (HDHP) all year.
- Leo does not have any other health coverage.
- Leo has had an HSA for two years.
- Leo’s employer contributed $1,500 in 2018 to Leo's HSA.
- In 2018, Leo’s aunt contributed $1,900 to Leo's HSA.
- Leo is a U.S. citizen and has a valid Social Security number.
1. Is Leo an eligible individual for HSA purposes even though he did not make his own contributions? | Yes |
Interview Notes
- Leo Williams is single and 45 years old.
- Leo works as an IT manager and his Form W-2 shows wages of $47,250.
- Leo participated in his employer’s self-only coverage High Deductible Health Plan (HDHP) all year.
- Leo does not have any other health coverage.
- Leo has had an HSA for two years.
- Leo’s employer contributed $1,500 in 2018 to Leo's HSA.
- In 2018, Leo’s aunt contributed $1,900 to Leo's HSA.
- Leo is a U.S. citizen and has a valid Social Security number.
2. What amount will Leo use to compute his HSA deduction on Form 1040, Schedule 1, line 25? | D. $3,400
(INCORRECT) |
Interview Notes
- Leo Williams is single and 45 years old.
- Leo works as an IT manager and his Form W-2 shows wages of $47,250.
- Leo participated in his employer’s self-only coverage High Deductible Health Plan (HDHP) all year.
- Leo does not have any other health coverage.
- Leo has had an HSA for two years.
- Leo’s employer contributed $1,500 in 2018 to Leo's HSA.
- In 2018, Leo’s aunt contributed $1,900 to Leo's HSA.
- Leo is a U.S. citizen and has a valid Social Security number.
3. Employer contributions to Leo’s HSA are reported on his Form W-2, box 12, code W. | True |
| Scenario 2: Ed and Christine Martinez |
Interview Notes
- Ed and Christine are married and will file a joint return.
- Ed is 47 years old, and Christine is 56 years old.
- Both were enrolled in self-only coverage High Deductible Health Plans (HDHPs) through their employers for the entire year of 2018.
- Ed and Christine each have an HSA.
- Both have contributed the maximum amounts to their HSAs in 2018.
- Ed and Christine are both U.S. citizens and have valid Social Security numbers.
4. The amount that can be contributed to an HSA depends on the following: | D. All of the above |
Interview Notes
- Ed and Christine are married and will file a joint return.
- Ed is 47 years old, and Christine is 56 years old.
- Both were enrolled in self-only coverage High Deductible Health Plans (HDHPs) through their employers for the entire year of 2018.
- Ed and Christine each have an HSA.
- Both have contributed the maximum amounts to their HSAs in 2018.
- Ed and Christine are both U.S. citizens and have valid Social Security numbers.
5. Ed and Christine are both eligible to make catch-up contributions to their individual HSAs. | False |
| Scenario 3: Judy Young |
Interview Notes
- Judy Young is 58 years old.
- Judy is single, is not disabled, and has no dependents.
- In 2018, she had earnings from her job of $24,300.
- Judy has participated in her employer's self-only HDHP coverage since June 1, 2018 when she started a new job.
- Judy was an eligible individual all year.
- Judy asked the HSA trustee from her previous job to rollover the balance of $2,000 into the HSA at her new job.
- In 2018, Judy contributed $975 to her HSA.
- In 2018, Judy took funds from her HSA to pay the following expenses:
- Insulin $275
- Doctor visit $185
- Yoga classes $480
- Prescription medicine $225
- Premiums for COBRA coverage $1,425
- Judy is a U.S. citizen and has a valid Social Security number.
6. The amount of Judy's HSA contribution reported on Form 8889, line 2 is $975. | True |
Interview Notes
- Judy Young is 58 years old.
- Judy is single, is not disabled, and has no dependents.
- In 2018, she had earnings from her job of $24,300.
- Judy has participated in her employer's self-only HDHP coverage since June 1, 2018 when she started a new job.
- Judy was an eligible individual all year.
- Judy asked the HSA trustee from her previous job to rollover the balance of $2,000 into the HSA at her new job.
- In 2018, Judy contributed $975 to her HSA.
- In 2018, Judy took funds from her HSA to pay the following expenses:
- Insulin $275
- Doctor visit $185
- Yoga classes $480
- Prescription medicine $225
- Premiums for COBRA coverage $1,425
- Judy is a U.S. citizen and has a valid Social Security number.
7. The amount of total distributions reported on Form 8889, line 14a is: | D. $2,590 |
Interview Notes
- Judy Young is 58 years old.
- Judy is single, is not disabled, and has no dependents.
- In 2018, she had earnings from her job of $24,300.
- Judy has participated in her employer's self-only HDHP coverage since June 1, 2018 when she started a new job.
- Judy was an eligible individual all year.
- Judy asked the HSA trustee from her previous job to rollover the balance of $2,000 into the HSA at her new job.
- In 2018, Judy contributed $975 to her HSA.
- In 2018, Judy took funds from her HSA to pay the following expenses:
- Insulin $275
- Doctor visit $185
- Yoga classes $480
- Prescription medicine $225
- Premiums for COBRA coverage $1,425
- Judy is a U.S. citizen and has a valid Social Security number.
8. What is the amount reported on Form 8889, line 15? | C. $2,110 |
| Scenario 4: Carl and Monica Smith |
Interview Notes
- Carl, age 46, and Monica, age 42, are married and will file a joint return.
- They have two children, Adriane and Robert, whom they will claim as dependents on their joint return.
- Monica's cousin, Michael (age 29), came to live with them in July 2018. Michael does not qualify as their dependent, but they paid $500 of Michael's medical bills in November 2018.
- Carl was enrolled all year in an HDHP with family coverage.
- Carl has had an HSA for four years. He has no other health insurance.
- In 2018, Carl made regular contributions to his HSA totaling $4,000.
- In 2018, Carl took $1,800 from his HSA to pay the following medical expenses:
- $300 to purchase Monica's eyeglasses (needed for medical reasons).
- $725 health club membership for Carl.
- $250 for over-the-counter eye medicine for their son, Robert (no prescription from doctor).
- $525 for Adriane's physical therapy sessions.
- Carl, Monica, Adriane, Robert, and cousin Michael are all U.S. citizens and have valid Social Security numbers.
9. The adjustment to income on Form 1040, Schedule 1, line 25 for Carl's HSA deduction is: | C. $4,000 |
Interview Notes
- Carl, age 46, and Monica, age 42, are married and will file a joint return.
- They have two children, Adriane and Robert, whom they will claim as dependents on their joint return.
- Monica's cousin, Michael (age 29), came to live with them in July 2018. Michael does not qualify as their dependent, but they paid $500 of Michael's medical bills in November 2018.
- Carl was enrolled all year in an HDHP with family coverage.
- Carl has had an HSA for four years. He has no other health insurance.
- In 2018, Carl made regular contributions to his HSA totaling $4,000.
- In 2018, Carl took $1,800 from his HSA to pay the following medical expenses:
- $300 to purchase Monica's eyeglasses (needed for medical reasons).
- $725 health club membership for Carl.
- $250 for over-the-counter eye medicine for their son, Robert (no prescription from doctor).
- $525 for Adriane's physical therapy sessions.
- Carl, Monica, Adriane, Robert, and cousin Michael are all U.S. citizens and have valid Social Security numbers.
10. Whose qualified medical expenses can Carl include for HSA purposes? | C. Carl, Monica, Adriane, and Robert |
Interview Notes
- Carl, age 46, and Monica, age 42, are married and will file a joint return.
- They have two children, Adriane and Robert, whom they will claim as dependents on their joint return.
- Monica's cousin, Michael (age 29), came to live with them in July 2018. Michael does not qualify as their dependent, but they paid $500 of Michael's medical bills in November 2018.
- Carl was enrolled all year in an HDHP with family coverage.
- Carl has had an HSA for four years. He has no other health insurance.
- In 2018, Carl made regular contributions to his HSA totaling $4,000.
- In 2018, Carl took $1,800 from his HSA to pay the following medical expenses:
- $300 to purchase Monica's eyeglasses (needed for medical reasons).
- $725 health club membership for Carl.
- $250 for over-the-counter eye medicine for their son, Robert (no prescription from doctor).
- $525 for Adriane's physical therapy sessions.
- Carl, Monica, Adriane, Robert, and cousin Michael are all U.S. citizens and have valid Social Security numbers.
11. On his Form 8889, Carl can include the $300 to purchase Monica's eyeglasses as a qualifying medical expense for HSA purposes. | True |
| Scenario 5: Peggy Walker |
| 12. The amount of Peggy Walker's HSA deduction on Form 8889, line 13 is $2,500. | True |
| 13. How much of Peggy's HSA distribution is taxable? | D. $200 |
14. The amount of qualified medical expenses reported on Form 8889, line 15 is $________.
(Do not enter dollar signs, commas, periods, or decimal points in your answer.) |
1280
|
| 15. What is the amount of the additional 20% tax reported on Form 8889, line 17b? | B. $40 |
