Form Msa - Montana Medical Care Savings Account - 2011 Page 2
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5Form MSA General 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 children
income for 2011?
is allowed to exclude contributions of up to $3,000 annually
There is no limit in any one year on the amount that you
in determining their Montana adjusted gross income, as
may deposit into your Montana medical care savings
well as interest and other income earned in the account.
account, but there is a limit on the amount that you can
This form needs to be included each year with the account
exclude from your federal adjusted gross income to arrive
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
on the account. If you are filing your return jointly with
children. Your child qualifies as a dependent when the child
your spouse and both spouses have a Montana medical
is:
care savings account, the maximum amount that you can
exclude from your federal adjusted gross income is $6,000
•
Under the age of 19; or
plus the interest or other income earned on both accounts.
•
Under the age of 23 and enrolled as a full-time student
What happens if I don’t use the entire amount I
at an accredited college or university; or
deposited in my Montana medical care savings
•
Legally entitled to the provision of proper or necessary
account this year for medical expenses?
subsistence, education, medical care or other care
There is no limit on the amount of funds and interest or
necessary for the child’s health, guidance or well-being
other income on those funds that can be retained tax-free
(for example, under a child-support agreement) and is
within your account. For example, if you deposited $500
not otherwise married, self-supporting, emancipated or
in your account this year, but withdrew $100 to pay for
a member of the armed forces; or
eligible medical expenses this year, your remaining balance
•
Mentally or physically incapacitated to the extent that
of $400 can be used to pay for future eligible medical
the child is not self-sufficient.
expenses.
“Eligible medical expenses” are medical expenses,
How do contributions to my account affect my Montana
defined under Internal Revenue Code at 26 U.S.C. 213(d),
taxable income?
that you, as the account holder, pay for yourself, your
You reduce your Montana taxable income in the year
spouse and your qualified children.
you make a contribution by the lesser of the amount you
“Nonqualified withdrawals” are any withdrawals
contribute to the account or $3,000. The reduction is based
from your account that are not used for eligible medical
on the amount you contribute, not the amount you pay
expenses.
for medical expenses. If you contributed $500, but paid
only $100 for expenses in the current tax year, you would
What is required to establish a Montana medical care
reduce your Montana adjusted gross income by $500
savings account?
even though you have not used the entire amount. If you
Any Montana resident can establish a Montana medical
don’t deposit any additional amounts in your account next
care savings account. The account has to be held
year, but you use the remaining $400 for eligible medical
separately and cannot be a joint account with your spouse
expenses next year, your Montana taxable income will
or child. If you are married, both spouses can establish
not be affected next year. 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
Yes, you can. The fact that you have a health savings
accounts and do not utilize a third-party administrator.
account and are allowed a federal itemized deduction for
When you self-administer your account, use Form MSA to
contributions made to the account does not prevent you
report your deposits and withdrawals.
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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