Investment

» oli - I just received a notice in the mail from my employer, a hospita

I just received a notice in the mail from my employer, a hospital, that I will have to pay additional taxes on the Health Savings Account since I live in California. I believe, but I don't have the information, that my employer should have known before launching this program, that California is not exempt from paying taxes on HSA. This incompetence on my employor's side will cost me taxes, plus money for additional work from my tax accountant.
Has anyone else experienced this and do I have a leg to stand on to demand that my employer pay for this bungling?

-- posted by oli

» allancoleman - I just received a notice in the mail from my employer, a hospita

In response to I just received a notice in the mail from my employer, a hospita posted by oli:

you are right . it is incompetence and bungling .
i've got a HSA ( Health Savings Account ) and they are a Federal tax exempt program . they are excellent , even for retirees . matter of fact , in figuring out my taxes via TurboTax , your annual HSA contribution is a ' tax credit ' and therefore comes straight off the top of your taxes owed on your Federal income taxes INSTEAD of a deduction thats hidden somewhere in the bowls of your tax return .

suggest you go to the Federal HSA web site at :

http://www.treasury.gov/offices/public-a...

and let them know of your problem AND also go to :

http://www.hsainsider.com

to let them know your concerns . this is TOO good a program to let a custodian mess up . let us know what you find out .

-- posted by allancoleman

» allancoleman - I just received a notice in the mail from my employer, a hospita

In response to I just received a notice in the mail from my employer, a hospita posted by oli:

oli ,

more research on your post and question led me to a couple of links that may help you in your research on California tax code as it applies to taxability of HSAs :

http://benefitslink.com/boards/index.php...

this first link above is the forum specificly on HSAs .

http://benefitslink.com/boards/index.php...

as you can see by this specific link to this above topic , California isn't the only state that doesn't comply with Federal tax code on the deductability of HSA contributions . since we've determined that the state of California is the one who is behind times , the only other question left to answer is " why " your employer set up this HSA program knowing your state didn't approve of the deductability of this Federal program . ? ?

from reading and researching more on this problem , it may be awhile before they , the state of California , solves your specific issue . good luck .

i guess the word to the wise is , " DON'T open a HSA if you're a resident of one of the states mentioned on this thread " . or at least double check with your particular state's tax code division BEFORE you open a HSA account AND send in your tax return . too bad because the finanical benefits of HSAs are terrific .

-- posted by allancoleman

» oli - I just received a notice in the mail from my employer, a hospita

In response to I just received a notice in the mail from my employer, a hospita posted by allancoleman:

Does this mean I can take action against my employer for not disclosing the fact that California did not conform?

-- posted by oli

» allancoleman - I just received a notice in the mail from my employer, a hospita

In response to I just received a notice in the mail from my employer, a hospita posted by oli:

you would have to seek legal council on that . the maximum contribution you could have taken for this tax year ( 2006 ) was $6,150.00 . it was a lessor amount in past tax years . HSA contributions / deductions , unless you contribute a full annual amount as i've done , is a monthly deduction taken from your paycheck so the amounts we're talking about here probably aren't very large and it's probably not worth your while paying for an attorney . and then there's the consideration of how far you want to push your employer who puts bread on your table .

IF it were me , i'd just chuck it up to bad luck and follow the legislation in your own state and participate when they straighten it out . and by the way , HSA contributions / deductions are ' pro - rated ' and once you've missed a month or a year , there is no way you can go back and recover that deduction . plus at age 65 when you qualify for Medicare , HSA contributions / deductions are no longer allowed anyway .

suggest you go to the Federal HSA web site link above and spend alittle time visiting ALL the links cause just like the IRS tax code , what you may read in a article or hear from your employer may NOT be right .

-- posted by allancoleman

» oli - I just received a notice in the mail from my employer, a hospita

In response to I just received a notice in the mail from my employer, a hospita posted by allancoleman:

I was not thinking of going to an attorney, but to the HR dept. and asking who was going to pay for the tax accountant and taxes on the mistake. Or should I not confront them?

-- posted by oli

» allancoleman - I just received a notice in the mail from my employer, a hospita

In response to I just received a notice in the mail from my employer, a hospita posted by oli:

" confront " isn't a word i like to use or think about , especially when it applied to my employer . if it were me , i'd certainly speak to them . keep in mind that when the great ( ? ? ) state of California decides to allow the tax benefits of this excellent Federal program , i'm sure you'll want to continue it on into retirement with your employer . in the meanwhile i'd visit the various links we've provided for you and further educate yourself on HSAs . i'm sure California , and other states , will comply with Federal regulations in the end .

and just to set the record straight , i am NOT a HSA expert . i have opened one and think they are great . and when you think of HSAs , think of IRAs , because they are very similar . only unlike IRAs , you in fact are your own custodian and penalities would apply to you and NOT your account holder as with IRAs . and you may have difficulty ' unwinding ' your present HSA for that reason . PLEASE check with an accountant , OR educate yourself on HSAs , before you do anything further .

-- posted by allancoleman

» allancoleman - I just received a notice in the mail from my employer, a hospita

In response to I just received a notice in the mail from my employer, a hospita posted by allancoleman:

by the way , additional information can be found by reading about " Form 8889 " ( Health Savings Accounts - HSAs ) in the IRS tax code and studing the " HSA Limits worksheet " associated with that form . good luck .

p.s. excuse me if i sound like i'm rushing off on ya , oli , but i do have to leave town shortly on real estate business ( weed clearing as Kirk calls it ) and will be happy to continue this discussion next week .

-- posted by allancoleman