Additional Tax Increased. For tax years beginning after December 31, 2010, the additional tax on distributions not used for qualified medical expenses increases from 10% to 20%. General Instructions Section references are to the Internal Revenue Code. Purpose of Form Form 5305-C is a model custodial account agreement that has been approved by the IRS. An HSA is established after the form is fully executed by both the account owner and the custodian. The form can be completed at any time during the tax year. This account must be created in the United States for the exclusive benefit of the account owner. Do not file Form 5305-C with the IRS. Instead, keep it with your records. For more information on HSAs, see Notice 2004-2, 2004-2 I.R.B. 269, Notice 2004-50, 2004-33 I.R.B. 196, Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, and other IRS published guidance. Definitions Identifying Number. The account owner’s social security number will serve as the identification number of this HSA. For married persons, each spouse who is eligible to open an HSA and wants to contribute to an HSA must establish his or her own account. An employer identification number (EIN) is required for an HSA for which a return is filed to report unrelated business taxable income. An EIN is also required for a common fund created for HSAs. High Deductible Health Plan (HDHP). For calendar year 2018, an HDHP for self-only coverage has a minimum annual deductible of $1,350 and an annual out-of-pocket maximum (deductibles, co-payments and other amounts, but not premiums) of $6,650. In 2019, the $1,350 minimum annual deductible remains at $1,350 and the annual out-of-pocket maximum increases to $6,750. For calendar year 2018, an HDHP for family coverage has a minimum annual deductible of $2,700 and an annual out-of-pocket maximum of $13,300. In 2019, the $2,700 minimum annual deductible remains at $2,700 and the annual out-of-pocket maximum increases to $13,500. These limits are subject to cost-of-living adjustments after 2019. Self-only coverage and family coverage under an HDHP. Family coverage means coverage that is not self-only coverage. Qualified medical expenses. Qualified medical expenses are amounts paid for medical care as defined in section 213(d) for the account owner, his or her spouse, or dependents (as defined in section 152) but only to the extent that such amounts are not compensated for by insurance or otherwise. With certain exceptions, health insurance premiums are no...
Additional Tax Increased. For tax years beginning after December 31, 2010, the additional tax on distributions not used for qualified medical expenses increases from 10% to 20%.
