Credit Karma Tax Really is Free and You Can Still Contribute to Your HSA

I've been binging quite a few blogs with my week off from work. Apparently this COVID 19 stuff has become a pandemic. What's funny to me is that it doesn't really change anything about my current routine. I've been mostly oblivious to it.

The other thing I gained from the blogs I binged are other tips. One blog mentioned some free money some banks were offering for opening a new accounts. I've done this once before a long time ago. And I got a free mailer for another bank I already had an account for (5/3 Bank). They give away $250 just for depositing $250. I started thinking about this more and more, but the deals on that site (doctorofcredit.com) involved quite a bit more than depositing a few hundred dollars.  I just think it's funny that I didn't even think to look for a site like this, when of course, duh, something like this would exist!

My point is, I forgot what a resource the PF (personal finance) arena can be.

So I thought I'd share a few things I learned.

Credit Karma
Yep, the hype is true. I filed my federal and state taxes with Credit Karma Tax and it was completely free. There was no upselling to be found. And I compared it to last year's taxes...by actually creating a dummy account and putting in last year's numbers and I got just about the same return. I even tested a friend's tax return on Credit Karma Tax vs a tax preparer she paid $300 for, and that was about the same as well. 

I've been a pretty loyal HR Block Free File user for most of my income-tax life. It's a nationwide brand; my taxes have always been easy; I liked that they used to store my old returns; and they give you a little feedback on things you did well - example, by saving x amount in your 401k, you decreased your effective tax rate by y amount; and I never had a need to pay for their premium packages.

However filing my 2018 taxes were different. That was the year I opened my brokerage account and my taxes were more "complex" than the Free File allowed for. And I was frequently asked to upgrade. At one point, it seemed I would not be able to file at all without paying for a premium package. Somehow, I got around it but made a mental note to click-around come 2019 tax time.

By 2019 tax time, I'd seen Credit Karma Tax in the PF blogosphere as well as on commercials, and my cousins recommended it. So, I tried it. It was easy and it was free.  I like the HR Block interface better; it just looked more polished. Credit Karma Tax seemed too consumer-friendly. I want to know what the real words for things are.

Health Savings Account (HSA)
That being said. I learned a little bit more about my HSA while preparing my taxes with Credit Karma Tax. Call Center #2 was my first time having access to an HSA. My training was so rushed, I never really got a chance to read through all my benefit documents. When it was time to enroll benefits, I just picked a plan that seemed to meet my basic needs and was an okay cost.

I'd read about HSAs when I first joined the PF community. All I knew was HSA = good. So I went with that.

(It was only after the fact, that I read through some of benefit book examples, and it seemed like my choice was actually a good financial choice for a family of 1. )

I learned later, you had to have $1,000 to invest HSA funds. So about 2 or 3 paychecks from the end of the 2019 year, I tried to increase my contribution to reach the $1k threshold. I couldn't do it online because there weren't enough pay periods left. I actually ended up not contributing anything at all with my last paycheck because the customer service rep told me he would be able to do it on his end. LIES (one of a series with Mercer Marketplace).

I tried to fix it with my Benefits team but was told there was nothing else that could be done. I suppose from  a payroll perspective this was true. So I was really mad for awhile and let it go.

I started to prep my taxes near the end of February. When the software asked about my HSA contributions for 2019, it said to include any contributions made from Jan 1 to April 15, 2020. What's that you say?!

I clicked the info box in the program and learned that was a thing you could do. Quoi??
I asked my HR how to do it, and they directed me to Mercer. No way, I thought, they were the ones that got me in this mess to begin with.

So I clicked around the internet so I could know exactly what I needed to do. I needed a form from the institution that serviced my HSA account and learned there should be a place to mark which year to make the contribution. Eureka! This had to be something I could do online.

I clicked around my HR site once more to try to log-in to my HSA account. No dice! After a few more days of frustration, I finally called Mercer Marketplace to get a link and log-in information. That they could do. When I asked about contributing to my 2019 HSA, they again told me it was too late.  This time, I knew this was wrong. So I asked about where there might be a form. And after some more wrong turns, I was lead to a form repository. I had to figure it out on my own then because I was fed with even more bad information.

These are the moments I'm so thankful I can read English well! I know that's silly to say, but some of my cousins learned a different language as their 1st language, and I always think that's so cool. But being able to field mis-information and figure things out on my own in part due to my command of English is just something I'm generally thankful for!

I tentatively filled out a form and pulled out some old checks from 2014. I also learned you can't use the HSA you opened in 2019 to pay for an old medical bill from 2018. Whoops. (Full disclosure: I actually asked-the-Internet how to write a check because it's been that long!)

So I had to find two forms.

One to correct a withdrawal I made for the old medical bill. The second to contribute to my 2019 HSA balance in 2020. (Well, it actually turned out to be the same form because they both counted as contributions just for different tax years.)

To avoid any confusion, I completed two separate forms for the two separate years; wrote 2 separate checks; put them in 2 separate envelopes.

I marked a date on my calendar when I thought it would all post. And it worked! I was so pleased. I was even able to convert any money over the $1k threshold to automatically invest in a target date fund I picked out.

I learned from reading another blogger's post that after she retires she plans to move her HSA to another firm (Lively) that doesn't have the $1k threshold and is low or no fee.

The jury's still out for me as far as the $1k threshold goes. Even my employer's benefit guide recommends spending cash to pay for medical expenses while your HSA account grows. I actually don't know if I can even eliminate the the threshold while I still work for this employer. 

As for spending cash for medical expenses, we'll just have to see. I know the thought of spending cash prevented me from going to urgent care when I was sick last week, so I still don't know. I think mostly with having a high-deductible plan, I don't like that I don't know how much things are going to cost.

I knew with a regular insurance plan, I would generally just pay the co-pay. So I'm still navigating that.  Every now and then, I think about trying cognitive behavior therapy, but I don't know how much something like that is going to cost because I'd probably be paying out-of-pocket.

One thing I did do as far as accounting for the HSA payroll deductions, I moved it from the "income" column to "expenses" column. When I see other bloggers tally their assets, they count it as an asset. It was confusing too because it's called a Health "Savings" Account, so I wanted to think of it as income, but really it's just pre-paying future medical expenses. So to help me get a better picture of where my money goes, I've started including each HSA payroll deduction as an expense.