When filing Form 8853 for an Archer MSA Deduction, you are required to figure the limitation that applies to you in regards to how much of a deduction you are eligible to report.
How do I figure the Limitation?
The IRS provides a worksheet to calculate the amount of this limitation based on monthly premiums and coverage. You will need to determine the monthly amounts as outlined below.
If either condition applies, enter $0 for that month:
- If you were enrolled in Medicare for the month
- If you were not an eligible individual on the first day of the month
Depending on the coverage you selected for your High Deductible Health Plan on the first day of the month, You will either:
- Enter 65% of the annual deductible (Self-only coverage) The annual deductible must be at least $2,350 but not more than $3,550 for the month
- Enter 75% of the annual deductible (Family coverage) The annual deductible must be at least $4,750 but not more than $7,100.
Once each month is completed, add up the total for all months. Then, divide the total by 12. The result will be your limitation which will be entered on Form 8853 on your return.
TIP: If eligibility and coverage did not change for the entire year, figure the amount for January only and enter that amount as your limitation.
What If I had more than one HDHP?
If you (and your spouse) had more than one HDHP on the first day of the month and one plan has family coverage, use the family coverage rules for that month. If both spouses had family coverage on the first day of the month, you are both treated as having family coverage with the lowest annual deductible.
What if I am filing Married Filing Separate?
If you have a High Deductible Health Plan (HDHP) with family coverage and file a married filing separate return, enter 37.5% of the annual deductible for each month. If both you and your spouse agree to split the 75% of the annual deductible in a different manner, enter your share instead. Be sure that your spouse is entering their share in the same manner.
Where do I enter this amount?
Once this worksheet has been finished, you can properly complete Form 8853 for your Archer MSA Deduction.
Form 8853 can be found within the program by going to:
- Federal Section
- Select My Forms
- Adjustments to Income
- Medical Savings Account Form 8853
For more information, please refer to the Instructions for Form 8853.