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2016 HSA Contribution Deadline

Posted on January 4th, 2017

The deadline to make HSA contributions for the 2016 tax year is April 18, 2017. The deadline would normally be April 15th, which is the usual deadline to file federal tax returns, but that day falls on a Saturday this year so the IRS has announced they will allow a few extra days to submit 2016 tax returns. 
Even though the deadline to make contributions for 2016 isn’t until April 18th, people should not wait to establish their HSA. The reason being that funds can only be withdrawn from the account tax-free and without penalty for qualified medical expenses incurred on or after the establishment date of the HSA. By waiting until April 18th to establish an HSA, a person would still be entitled to a tax deduction for their contribution for 2016, but they could not reimburse themselves (tax-free and without penalty) for medical expenses incurred prior to the establishment date.  
The maximum contribution that can be made to an HSA for 2016 is $3,350 for single coverage and $6,750 for family coverage, plus a $1,000 catch-up contribution for people age 55 and older. These amounts must be pro-rated based on the number of full months that a person was HSA-eligible. However, there is something referred to as the “last month rule” that allows the full annual contribution to be made when someone isn’t HSA-eligible for the entire year. The last month rule provides that as long as you were HSA-eligible by December 1, 2016, and you remain HSA-eligible for all of 2017, then you can make the entire annual contribution for 2016 (and also for 2017).  

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