<p>Kelsmom…would adding money to the HSA in 2013 help a family who is trying to reduce AGI for 2012?</p>
<p>Even if we could up our HSA contributions, of course it’s far too late to do that for last year. </p>
<p>Kelsmom–this isn’t about AGI, it’s about EFC. Our EFC is over the limit. Our EFC is based only on income (no contributions from assets) so I don’t think there is any way I can reduce our 2012 income now, right? </p>
<p>Our taxes are filed, but I can do an amended return easily enough. One thing did occur to me: We had a $2K capital gain from dividends. Since we are in the 15% tax bracket, we paid no taxes on these capital gains. I wonder if there is a way for me to go back and pay those taxes? I think an extra $300 in taxes would get us under the limit. (47% of $300, right?)</p>
<p>Kelsmom…would adding money to the HSA in 2013 help a family who is trying to reduce AGI for 2012?</p>
<hr>
<p>Only if it could be done retroactively for 2012 - I couldn’t tell you if that’s possible - not sure if it works that way IRAs do. Otherwise, it’s a strategy for the future.</p>
<p>Kelsmom–this isn’t about AGI, it’s about EFC. Our EFC is over the limit. Our EFC is based only on income (no contributions from assets) so I don’t think there is any way I can reduce our 2012 income now, right? </p>
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<p>No, I don’t think so, unfortunately. Although I don’t know about the capital gains …</p>
<p>I just got an email from our company;s HR office saying that we have until 4/15 to increase HSA contributions for 2012. I’ll be calling them to ask about this and will report back.</p>
<p>2012 HSA Summary
(Read U.S. Treasury HSA Indexed Amounts for details)</p>
<pre><code>Contribution deadline: April 15, 2013 for 2012 tax returns.
Eligible health plans have a deductible of at least $1,200 for individual coverage, $2,400 for family coverage.
Maximum annual out-of-pocket amounts (deductibles, co-payments, and other amounts, but not premiums) are $6,050 for individual, and $12,100 for family.
Annual contribution limit is $3,100 for individual, and $6,250 for family. Individuals age 55 and older can also make additional “catch-up” contributions up to $1,000.
</code></pre>
<p>Like IRAs, the deadline is 2013 of the following year. I’m not sure how this “catch up” contributions works, but I think that might be why we got the e-mail. If you have an HSA in place, it appears that you can contribute up to the maximums by 4/15/2013 to reduce 2012 income. If you owe medical bills, you can pay the right out of there anyways so you are getting a tax break on the funds to pay those bills not covered by insurance. Call the administrator of your HSA plan if you have one and see if you can contribute more for 2012. That would reduce 2012 income for you.</p>
<p>We do have an HSA. BUT, won’t those contributions get added back in to our AGI to calculate MAGI, as with traditional IRA contributions? </p>
<p>Thank you everyone for continuing to help!</p>
<p>As Kelsmom says, the HSA contributions would NOT be added back like IRA contributions would. The question is whether your plan will let you do this retroactively. Apparently ours does, as we are getting e-mails letting us know we can if we have not contributed the maximum. LIke an IRA, you have until 4/15/2013 to make the contribution and can deduct it from your 2012 income. However, you don’t have to add it back onto income for FAFSA purposes, is what I see. I don’t remember how it works for PROFILE,but I think for FAFSA it is not added back. </p>
<p>But don’t take my word, or anyone’s for that matter on things like this. Look it up, get professional help, like through the financial aid office that you are dealing with since that is the person who will be looking at the documents. I’m no tax expert and have no official training in fin aid stuff either. Just have picked up a lot.</p>
<p>CPT, I’m confused. Looking above, I see this is what Kelsmom said: </p>
<p>“The guidance this year explicitly states that HSA contributions are added back in (as untaxed income). But if the issue is that you need an AGI under a certain amount, I would think that might work - it would reduce the AGI.”</p>
<p>Can you amend your return, and reduce your itemized deductions so that your taxes go up by the amount you need to reduce your EFC?</p>
<p>Hmmmm…maybe…</p>
<p>Let me see if I’ve got this right…AAI in the worksheet (I don’t have them here with me at work, or I’d just look myself) is calculated based on MAGI and not taxable income right? So, if I reduce my deductions, my taxes will increase and my AAI will decrease a proportional amount (47% of the increased tax amount), correct? If that’s true it might work. </p>
<p>I’m wondering…maybe we could decline the tuition tax credit we got? I think it was only $450. That would not change the total tax used in the calculation, obviously, but would reduce the AAI (since those credits are added back in) by $450 and lower our EFC by $221.</p>
<p>Scubasue, I just did a little lookie see and yes, the HSA would have to be added back in even for FAFSA. An FSA does not, because it has to be spent in a year. Don’t get it but that is waht it seems to be.</p>
<p>Looks like you are really cooking up some ideas here. Hope it works out.</p>
<p>The education tax credit does not increase your EFC, so I don’t quite understand how not taking it would reduce your EFC.</p>
<p>Have you considered taking the Tuition and Fees deduction for his college expenses (an above the line deduction, which reduces the AGI) instead of the American Opportunity Credit? Yes, you end up losing the dollar for dollar credit, in favor of a less beneficial reduction in taxes along with the reduced AGI. While the AOC is generally more beneficial, there is nothing in the tax code saying you have to take it over the deduction. And obviously, losing even $2500 in tax credits may be worthwhile if it means qualifying for $9000 in grants.</p>
<p>Everyone thank you for the ideas. I have time today to consider each one of them carefully and to use the formula worksheets to calculate how each possible change would affect the EFC. </p>
<p>Swimcatsmom–you’re right (of course). Once I got home last night and had the worksheets in front of me I could see that it is the after-credit tax that is used. in the allowances and that income is reduced by the amount of the credit, so it’s a wash. </p>
<p>We itemized our deductions, which turned out to be more than the standard deduction by only $5000. I’m wondering if the easiest thing to do would be to claim our standard deduction only.</p>
<p>^^^ If that ends up not working, you could always amend your return later to take the itemized deductions.</p>