Instructions For Form Msa - Montana Medical Care Savings Account Worksheet
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4Form MSA Instructions
Purpose of this form. A resident who establishes a
How much can I contribute to my Montana medical
medical savings account (or whose employer establishes
care savings account this year, and how much of this
an account for them) to pay for their own medical
amount can I subtract from my federal adjusted gross
expenses, and those of their spouse and qualifying
income for 2016?
children, is allowed to exclude contributions of up to $3,000
There is no limit in any one year on the amount that you
annually in determining their Montana adjusted gross
may deposit into your Montana medical care savings
income, as well as interest and other income earned on the
account, but there is a limit on the amount that you can
account. This form needs to be included each year with the
exclude from your federal adjusted gross income to arrive
account holder’s individual income tax return.
at your Montana adjusted gross income.
Definitions
If your filing status is single, head of household or married
filing separately, the maximum amount that you can
Account holder is a Montana resident who establishes a
exclude from your federal adjusted gross income in any
Montana medical care savings account.
one year is $3,000 plus the interest or other income earned
Dependent means your spouse and your qualified children.
on the account. If you are filing your return jointly with
Your child qualifies as a dependent when the child is:
your spouse and both spouses have a Montana medical
care savings account, the maximum amount that you can
● Under the age of 19; or
exclude from your federal adjusted gross income is $6,000
● Under the age of 23 and enrolled as a full-time student
plus the interest or other income earned on both accounts.
at an accredited college or university; or
What happens if I don’t use the entire amount I
● Legally entitled to the provision of proper or necessary
deposited in my Montana medical care savings
subsistence, education, medical care, or other care
account this year for medical expenses?
necessary for the child’s health, guidance or well-being
There is no limit on the amount of funds and interest or
(for example, under a child-support agreement) and
other income on those funds that can be retained tax-free
the child is not otherwise married, self-supporting,
within your account. For example, if you deposited $500
emancipated, or a member of the armed forces; or
in your account this year, but withdrew $100 to pay for
● Mentally or physically incapacitated to the extent that
eligible medical expenses this year, your remaining balance
the child is not self-sufficient.
of $400 can be used to pay for future eligible medical
expenses.
Eligible medical expenses are medical expenses, defined
under Internal Revenue Code at 26 U.S.C. 213(d), that you,
How do contributions to my account affect my Montana
as the account holder, pay for yourself, your spouse and
taxable income?
your qualified children.
You reduce your Montana taxable income in the year
Nonqualified withdrawals are any withdrawals from your
you make a contribution by the lesser of the amount you
account that are not used for eligible medical expenses.
contribute to the account or $3,000. The reduction is
based on the amount you contribute, not the amount you
Frequently Asked Questions
pay for medical expenses. If you contributed $500, but
What is required to establish a Montana medical care
paid only $100 for expenses in the current tax year, you
savings account?
would reduce your Montana adjusted gross income by
$500 even though you have not used the entire amount.
Any Montana resident can establish a Montana medical
In the following tax year, if you don’t deposit any additional
care savings account. The account has to be held
amounts in your account, but you use the remaining $400
separately and cannot be a joint account with your spouse
for eligible medical expenses, your Montana taxable
or child. If you are married, both spouses can establish
income will not be affected. You cannot claim an itemized
their own Montana medical care savings account and take
deduction for medical expenses you pay from your account
advantage of the Montana tax benefit. Your account can be
in either year.
established with any financial or investment institution.
I have a federal health savings account established
Your Montana medical care savings account can be self-
with my employer. Can I also have a Montana medical
administered or administered by a financial institution or
care savings account?
an accountant. Most account holders self-administer their
accounts and do not utilize a third-party administrator.
Yes, you can. The fact that you have a health savings
When you self-administer your account, use Form MSA to
account and are allowed a federal itemized deduction for
report your deposits and withdrawals.
contributions made to the account does not prevent you
from establishing a separate Montana medical care savings
account and making qualifying contributions to it. These
accounts have to be maintained separately and the funds
cannot be commingled.
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