Exclusions. The entire $50,000 you give isn't vulnerable to taxation. The IRS allows exclusions, a dollar limit you can give away tax-free. As of the 2012 tax year, the exclusion amount is $13,000 for each person you make a gift to.If you're married, you can double that: you and your spouse are each entitled to give away $13,000 per person.f your generosity qualifies as a gift with the IRS, you'll have to pay taxes twice on the amount that exceeds the exclusion: once in income tax, then again for the federal gift tax. The 2012 federal gift tax rate is 35 percent.
The IRS has released the inflation-adjusted limits for HSAs and HDHPs for 2018. These limits include: (1) the maximum HSA contribution limit; (2) the minimum deductible amount for HDHPs; and (3) the maximum out-of-pocket expense limit for HDHPs. The IRS limits for HSA contributions and HDHP cost-sharing will all increase for 2018. This Compliance Bulletin shows the new limits for 2018 (as compared to the 2017 limits).
Reporting to the IRS. To take advantage of your HSAs tax benefits, you'll have to report your HSA activity to the IRS. It's up to you to keep track of receipts for expenses you pay for with your HSA. You'll get tax forms that detail your distributions for the year. If any of your distributions were used for non-qualified medical expenses, you are responsible for: Reporting that to the IRS on IRS Form 8889; Paying income taxes on the amount; Possibly paying an additional 20 percent penalty; Special tax implications. Keep in mind the following scenarios that can affect how your HSA is taxed: 1  Transfers - If you choose to transfer funds from one HSA to another, you must do so within 60 days of withdrawing the funds to avoid a 10 percent tax penalty. Excess contributions - If you contribute more than the allowable amount to your HSA by accident or because you ended coverage in a qualified health plan, you will have to count the extra amount as taxable income and pay a 6 percent penalty. To avoid paying taxes and incurring a penalty, you can fill out an Excess Contribution and Deposit Correction Request Form to have excess funds returned to you. This and other account forms are available after you log in.