PART VII—ADDITIONAL ITEMIZED DEDUCTIONS FOR INDIVIDUALS
Editorial Notes
Amendments
2020—
2017—
2003—
2001—
2000—
1997—
1996—
1990—
1988—
1986—
1981—
1978—
1976—
1974—
1971—
1964—
1962—
§211. Allowance of deductions
In computing taxable income under section 63, there shall be allowed as deductions the items specified in this part, subject to the exceptions provided in part IX (section 261 and following, relating to items not deductible).
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1977—
Statutory Notes and Related Subsidiaries
Effective Date of 1977 Amendment
Amendment by
§212. Expenses for production of income
In the case of an individual, there shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year—
(1) for the production or collection of income;
(2) for the management, conservation, or maintenance of property held for the production of income; or
(3) in connection with the determination, collection, or refund of any tax.
(Aug. 16, 1954, ch. 736,
Statutory Notes and Related Subsidiaries
Denial of Deduction for Amounts Paid or Incurred on Judgments in Suits Brought To Recover Price Increases in Purchase of New Principal Residence
No deductions to be allowed in computing taxable income for two-thirds of any amount paid or incurred on a judgment entered against any person in a suit brought under section 208(b) of
§213. Medical, dental, etc., expenses
(a) Allowance of deduction
There shall be allowed as a deduction the expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, his spouse, or a dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof), to the extent that such expenses exceed 7.5 percent of adjusted gross income.
(b) Limitation with respect to medicine and drugs
An amount paid during the taxable year for medicine or a drug shall be taken into account under subsection (a) only if such medicine or drug is a prescribed drug or is insulin.
(c) Special rule for decedents
(1) Treatment of expenses paid after death
For purposes of subsection (a), expenses for the medical care of the taxpayer which are paid out of his estate during the 1-year period beginning with the day after the date of his death shall be treated as paid by the taxpayer at the time incurred.
(2) Limitation
Paragraph (1) shall not apply if the amount paid is allowable under section 2053 as a deduction in computing the taxable estate of the decedent, but this paragraph shall not apply if (within the time and in the manner and form prescribed by the Secretary) there is filed—
(A) a statement that such amount has not been allowed as a deduction under section 2053, and
(B) a waiver of the right to have such amount allowed at any time as a deduction under section 2053.
(d) Definitions
For purposes of this section—
(1) The term "medical care" means amounts paid—
(A) for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body,
(B) for transportation primarily for and essential to medical care referred to in subparagraph (A),
(C) for qualified long-term care services (as defined in section 7702B(c)), or
(D) for insurance (including amounts paid as premiums under part B of title XVIII of the Social Security Act, relating to supplementary medical insurance for the aged) covering medical care referred to in subparagraphs (A) and (B) or for any qualified long-term care insurance contract (as defined in section 7702B(b)).
In the case of a qualified long-term care insurance contract (as defined in section 7702B(b)), only eligible long-term care premiums (as defined in paragraph (10)) shall be taken into account under subparagraph (D).
(2)
(A) the medical care referred to in paragraph (1)(A) is provided by a physician in a licensed hospital (or in a medical care facility which is related to, or the equivalent of, a licensed hospital), and
(B) there is no significant element of personal pleasure, recreation, or vacation in the travel away from home.
The amount taken into account under the preceding sentence shall not exceed $50 for each night for each individual.
(3)
(4)
(5)
(6) In the case of an insurance contract under which amounts are payable for other than medical care referred to in subparagraphs (A), (B), and (C) of paragraph (1)—
(A) no amount shall be treated as paid for insurance to which paragraph (1)(D) applies unless the charge for such insurance is either separately stated in the contract, or furnished to the policyholder by the insurance company in a separate statement,
(B) the amount taken into account as the amount paid for such insurance shall not exceed such charge, and
(C) no amount shall be treated as paid for such insurance if the amount specified in the contract (or furnished to the policyholder by the insurance company in a separate statement) as the charge for such insurance is unreasonably large in relation to the total charges under the contract.
(7) Subject to the limitations of paragraph (6), premiums paid during the taxable year by a taxpayer before he attains the age of 65 for insurance covering medical care (within the meaning of subparagraphs (A), (B), and (C) of paragraph (1)) for the taxpayer, his spouse, or a dependent after the taxpayer attains the age of 65 shall be treated as expenses paid during the taxable year for insurance which constitutes medical care if premiums for such insurance are payable (on a level payment basis) under the contract for a period of 10 years or more or until the year in which the taxpayer attains the age of 65 (but in no case for a period of less than 5 years).
(8) The determination of whether an individual is married at any time during the taxable year shall be made in accordance with the provisions of section 6013(d) (relating to determination of status as husband and wife).
(9)
(A)
(B)
(10)
(A)
| In the case of an individual with an attained age before the close of the taxable year of: | The limitation is: |
|---|---|
| 40 or less | $ 200 |
| More than 40 but not more than 50 | 375 |
| More than 50 but not more than 60 | 750 |
| More than 60 but not more than 70 | 2,000 |
| More than 70 | 2,500. |
(B)
(i)
(ii)
(I) the medical care component of the C-CPI-U (as defined in section 1(f)(6)) for August of the preceding calendar year, exceeds
(II) such component of the CPI (as defined in section 1(f)(4)) for August of 1996, multiplied by the amount determined under section 1(f)(3)(B).
The Secretary shall, in consultation with the Secretary of Health and Human Services, prescribe an adjustment which the Secretary determines is more appropriate for purposes of this paragraph than the adjustment described in the preceding sentence, and the adjustment so prescribed shall apply in lieu of the adjustment described in the preceding sentence.
(11)
(A) by the spouse of the individual or by a relative (directly or through a partnership, corporation, or other entity) unless the service is provided by a licensed professional with respect to such service, or
(B) by a corporation or partnership which is related (within the meaning of section 267(b) or 707(b)) to the individual.
For purposes of this paragraph, the term "relative" means an individual bearing a relationship to the individual which is described in any of subparagraphs (A) through (G) of section 152(d)(2). This paragraph shall not apply for purposes of section 105(b) with respect to reimbursements through insurance.
(e) Exclusion of amounts allowed for care of certain dependents
Any expense allowed as a credit under section 21 shall not be treated as an expense paid for medical care.
(Aug. 16, 1954, ch. 736,
Inflation Adjusted Items for Certain Years
For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under
Editorial Notes
References in Text
The Social Security Act, referred to in subsec. (d)(1)(D), is act Aug. 14, 1935, ch. 531,
Amendments
2020—Subsec. (a).
Subsec. (f).
2019—Subsec. (f).
2017—Subsec. (d)(10)(B)(ii).
"(I) the medical care component of the Consumer Price Index (as defined in section 1(f)(5)) for August of the preceding calendar year, exceeds
"(II) such component for August of 1996."
Subsec. (f).
2010—Subsec. (a).
Subsec. (f).
2004—Subsec. (a).
Subsec. (d)(11).
1996—Subsec. (d)(1).
Subsec. (d)(1)(B).
Subsec. (d)(1)(C).
Subsec. (d)(1)(D).
Subsec. (d)(6).
Subsec. (d)(6)(A).
Subsec. (d)(7).
Subsec. (d)(10), (11).
1993—Subsec. (f).
1990—Subsec. (d)(9).
Subsec. (f).
1986—Subsec. (a).
1984—Subsec. (d)(2), (3).
Subsec. (d)(4).
Subsec. (d)(5).
Subsec. (d)(6).
Subsec. (d)(7).
Subsec. (d)(8).
Subsec. (e).
1982—Subsec. (a).
Subsec. (b).
Subsec. (c).
Subsec. (d).
Subsecs. (e), (f).
1976—Subsec. (d)(2).
Subsec. (f).
1965—Subsec. (a).
"(1) If neither the taxpayer nor his spouse has attained the age of 65 before the close of the taxable year—
"(A) the amount of such expenses for the care of any dependent who—
"(i) is the mother or father of the taxpayer or of his spouse, and
"(ii) has attained the age of 65 before the close of the taxable year, and
"(B) the amount by which such expenses for the care of the taxpayer, his spouse, and such dependents (other than any dependent described in subparagraph (A)) exceed 3 percent of the adjusted gross income.
"(2) If either the taxpayer or his spouse has attained the age of 65 before the close of the taxable year—
"(A) the amount of such expenses for the care of the taxpayer and his spouse.
"(B) the amount of such expenses for the care of any dependent described in paragraph (1)(A), and
"(C) the amount by which such expenses for the care of such dependents (other than any dependent described in paragraph (1)(A)) exceed 3 percent of the adjusted gross income."
Subsec. (b).
"(1) the taxpayer and his spouse, if either of them has attained the age of 65 before the close of the taxable year, or
"(2) any dependent described in subsection (a)(1)(A)."
Subsec. (c).
Subsec. (e).
Subsec. (g).
1964—Subsec. (b).
1962—Subsec. (c).
Subsec. (g).
1960—Subsec. (a).
1958—Subsec. (c).
Subsec. (d)(2)(A).
Subsec. (g).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Effective Date of 2019 Amendment
Amendment by
Effective Date of 2017 Amendment
Amendment by section 11002(d)(7) of
Amendment by section 11027(a) of
Effective Date of 2010 Amendment
Amendment by
Effective Date of 2004 Amendment
Amendment by
Effective Date of 1996 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1990 Amendment
Amendment by section 11111(d)(1) of
Effective Date of 1986 Amendment
Amendment by
Effective Date of 1984 Amendment
Amendment by section 423(b) of
Amendment by section 474(r)(9) of
Amendment by section 711(b) of
Effective Date of 1982 Amendment
"(1)
"(2)
Effective Date of 1976 Amendment
Amendment by section 504(c)(1) of
Effective Date of 1965 Amendment
Effective Date of 1964 Amendment
Effective Date of 1962 Amendment
Effective Date of 1960 Amendment
Effective Date of 1958 Amendment
Amendment by section 16 of
[§214. Repealed. Pub. L. 94–455, title V, §504(b)(1), Oct. 4, 1976, 90 Stat. 1565 ]
Section, acts Aug. 16, 1954, ch. 736,
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal applicable to taxable years beginning after Dec. 31, 1975, see section 508 of
[§215. Repealed. Pub. L. 115–97, title I, §11051(a), Dec. 22, 2017, 131 Stat. 2089 ]
Section, act Aug. 16, 1954, ch. 736,
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal applicable to any divorce or separation instrument (as defined in former
§216. Deduction of taxes, interest, and business depreciation by cooperative housing corporation tenant-stockholder
(a) Allowance of deduction
In the case of a tenant-stockholder (as defined in subsection (b)(2)), there shall be allowed as a deduction amounts (not otherwise deductible) paid or accrued to a cooperative housing corporation within the taxable year, but only to the extent that such amounts represent the tenant-stockholder's proportionate share of—
(1) the real estate taxes allowable as a deduction to the corporation under section 164 which are paid or incurred by the corporation on the houses or apartment building and on the land on which such houses (or building) are situated, or
(2) the interest allowable as a deduction to the corporation under section 163 which is paid or incurred by the corporation on its indebtedness contracted—
(A) in the acquisition, construction, alteration, rehabilitation, or maintenance of the houses or apartment building, or
(B) in the acquisition of the land on which the houses (or apartment building) are situated.
(b) Definitions
For purposes of this section—
(1) Cooperative housing corporation
The term "cooperative housing corporation" means a corporation—
(A) having one and only one class of stock outstanding,
(B) each of the stockholders of which is entitled, solely by reason of his ownership of stock in the corporation, to occupy for dwelling purposes a house, or an apartment in a building, owned or leased by such corporation,
(C) no stockholder of which is entitled (either conditionally or unconditionally) to receive any distribution not out of earnings and profits of the corporation except on a complete or partial liquidation of the corporation, and
(D) meeting 1 or more of the following requirements for the taxable year in which the taxes and interest described in subsection (a) are paid or incurred:
(i) 80 percent or more of the corporation's gross income for such taxable year is derived from tenant-stockholders.
(ii) At all times during such taxable year, 80 percent or more of the total square footage of the corporation's property is used or available for use by the tenant-stockholders for residential purposes or purposes ancillary to such residential use.
(iii) 90 percent or more of the expenditures of the corporation paid or incurred during such taxable year are paid or incurred for the acquisition, construction, management, maintenance, or care of the corporation's property for the benefit of the tenant-stockholders.
(2) Tenant-stockholder
The term "tenant-stockholder" means a person who is a stockholder in a cooperative housing corporation, and whose stock is fully paid-up in an amount not less than an amount shown to the satisfaction of the Secretary as bearing a reasonable relationship to the portion of the value of the corporation's equity in the houses or apartment building and the land on which situated which is attributable to the house or apartment which such person is entitled to occupy.
(3) Tenant-stockholder's proportionate share
(A) In general
Except as provided in subparagraph (B), the term "tenant-stockholder's proportionate share" means that proportion which the stock of the cooperative housing corporation owned by the tenant-stockholder is of the total outstanding stock of the corporation (including any stock held by the corporation).
(B) Special rule where allocation of taxes or interest reflect cost to corporation of stockholder's unit
(i) In general
If, for any taxable year—
(I) each dwelling unit owned or leased by a cooperative housing corporation is separately allocated a share of such corporation's real estate taxes described in subsection (a)(1) or a share of such corporation's interest described in subsection (a)(2), and
(II) such allocations reasonably reflect the cost to such corporation of such taxes, or of such interest, attributable to the tenant-stockholder's dwelling unit (and such unit's share of the common areas),
then the term "tenant-stockholder's proportionate share" means the shares determined in accordance with the allocations described in subclause (II).
(ii) Election by corporation required
Clause (i) shall apply with respect to any cooperative housing corporation only if such corporation elects its application. Such an election, once made, may be revoked only with the consent of the Secretary.
(4) Stock owned by governmental units
For purposes of this subsection, in determining whether a corporation is a cooperative housing corporation, stock owned and apartments leased by the United States or any of its possessions, a State or any political subdivision thereof, or any agency or instrumentality of the foregoing empowered to acquire shares in a cooperative housing corporation for the purpose of providing housing facilities, shall not be taken into account.
(5) Prior approval of occupancy
For purposes of this section, in the following cases there shall not be taken into account the fact that (by agreement with the cooperative housing corporation) the person or his nominee may not occupy the house or apartment without the prior approval of such corporation:
(A) In any case where a person acquires stock of a cooperative housing corporation by operation of law.
(B) In any case where a person other than an individual acquires stock of a cooperative housing corporation.
(C) In any case where the original seller acquires any stock of the cooperative housing corporation from the corporation not later than 1 year after the date on which the apartments or houses (or leaseholds therein) are transferred by the original seller to the corporation.
(6) Original seller defined
For purposes of paragraph (5), the term "original seller" means the person from whom the corporation has acquired the apartments or houses (or leaseholds therein).
(c) Treatment as property subject to depreciation
(1) In general
So much of the stock of a tenant-stockholder in a cooperative housing corporation as is allocable, under regulations prescribed by the Secretary, to a proprietary lease or right of tenancy in property subject to the allowance for depreciation under section 167(a) shall, to the extent such proprietary lease or right of tenancy is used by such tenant-stockholder in a trade or business or for the production of income, be treated as property subject to the allowance for depreciation under section 167(a). The preceding sentence shall not be construed to limit or deny a deduction for depreciation under section 167(a) by a cooperative housing corporation with respect to property owned by such a corporation and leased to tenant-stockholders.
(2) Deduction limited to adjusted basis in stock
(A) In general
The amount of any deduction for depreciation allowable under section 167(a) to a tenant-stockholder with respect to any stock for any taxable year by reason of paragraph (1) shall not exceed the adjusted basis of such stock as of the close of the taxable year of the tenant-stockholder in which such deduction was incurred.
(B) Carryforward of disallowed amount
The amount of any deduction which is not allowed by reason of subparagraph (A) shall, subject to the provisions of subparagraph (A), be treated as a deduction allowable under section 167(a) in the succeeding taxable year.
(d) Disallowance of deduction for certain payments to the corporation
No deduction shall be allowed to a stockholder in a cooperative housing corporation for any amount paid or accrued to such corporation during any taxable year (in excess of the stockholder's proportionate share of the items described in subsections (a)(1) and (a)(2)) to the extent that, under regulations prescribed by the Secretary, such amount is properly allocable to amounts paid or incurred at any time by the corporation which are chargeable to the corporation's capital account. The stockholder's adjusted basis in the stock in the corporation shall be increased by the amount of such disallowance.
(e) Distributions by cooperative housing corporations
Except as provided in regulations no gain or loss shall be recognized on the distribution by a cooperative housing corporation of a dwelling unit to a stockholder in such corporation if such distribution is in exchange for the stockholder's stock in such corporation and such dwelling unit is used as his principal residence (within the meaning of section 121).
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
2007—Subsec. (b)(1)(D).
1997—Subsec. (e).
1990—Subsec. (e).
1988—Subsec. (e).
1986—Subsec. (b)(2).
Subsec. (b)(3).
Subsec. (b)(5).
Subsec. (b)(6).
Subsec. (c).
Subsec. (d).
1980—Subsec. (b)(6)(A).
Subsec. (b)(6)(B) to (D).
1978—Subsec. (b)(6).
1976—Subsec. (b)(2).
Subsec. (b)(5).
Subsec. (c).
1969—Subsec. (b)(4).
1962—
Statutory Notes and Related Subsidiaries
Effective Date of 2007 Amendment
Effective Date of 1997 Amendment
Amendment by
Effective Date of 1990 Amendment
Amendment by
Effective Date of 1988 Amendment
Effective Date of 1986 Amendment
"(1)
"(2)
"(A) Except as provided in subparagraph (B), subsection (e) [set out below] shall apply to taxable years beginning before January 1, 1986.
"(B) Subsection (e)(7) [set out below] shall apply to amounts paid or incurred, and property acquired, in taxable years beginning, after December 31, 1985."
Effective Date of 1980 Amendment
Amendment by
Effective Date of 1978 Amendment
Effective Date of 1976 Amendment
Effective Date of 1969 Amendment
Effective Date of 1962 Amendment
Treatment of Amounts Received in Connection With Refinancing of Indebtedness of Certain Cooperative Housing Corporations; Treatment of Amounts Paid From Qualified Refinancing-Related Reserve
"(1)
"(A) closing costs, or
"(B) the creation of reserves for the qualified cooperative housing corporation,
in connection with a qualified refinancing.
"(2)
"(A)
"(i) section 216 of the Internal Revenue Code of 1954 [now 1986] (relating to deduction of taxes, interest, and business depreciation by cooperative housing corporation tenant-stockholder), and
"(ii) section 277 of such Code (relating to deductions incurred by certain membership organizations in transactions with members).
"(B)
"(3)
"(A) claimed (on a return of tax imposed by
"(B) reported (before April 16, 1986) by the qualified cooperative housing corporation to its tenant-stockholders as interest described in section 216(a)(2) of such Code,
shall be treated for purposes of such Code as if such amount were paid by such qualified cooperative housing corporation during such taxable year.
"(4)
"(A)
"(i) such corporation is, after the application of paragraphs (1) and (2), a cooperative housing corporation (as defined in section 216(b) of the Internal Revenue Code of 1954 [now 1986]),
"(ii) such corporation is subject to a qualified limited-profit housing companies law, and
"(iii) such corporation either—
"(I) filed for incorporation on July 22, 1965, or
"(II) filed for incorporation on March 5, 1964.
"(B)
"(5)
"(A) which occurred—
"(i) with respect to a qualified cooperative housing corporation described in paragraph (4)(A)(iii)(I) on September 20, 1978, or
"(ii) with respect to a qualified cooperative housing corporation described in paragraph (4)(A)(iii)(II) on November 21, 1978, and
"(B) in which a qualified cooperative housing corporation refinanced a first mortgage loan made to such corporation by a city housing development agency with a first mortgage loan made by a city housing development corporation and insured by an agency of the Federal Government and a second mortgage loan made by such city housing development agency, in the process of which a reserve was created (as required by such Federal agency) and closing costs were paid or reimbursed by such city housing development agency or corporation.
"(6)
"(7)
"(A)
"(i) no deduction shall be allowed under
"(ii) the basis of any property acquired with such payment (determined without regard to this subparagraph) shall be reduced by the amount of such payment.
"(B)
"(i) first from amounts excluded from gross income by reason of paragraph (1) to the extent thereof, and
"(ii) then from other amounts in the reserve."
§217. Moving expenses
(a) Deduction allowed
There shall be allowed as a deduction moving expenses paid or incurred during the taxable year in connection with the commencement of work by the taxpayer as an employee or as a self-employed individual at a new principal place of work.
(b) Definition of moving expenses
(1) In general
For purposes of this section, the term "moving expenses" means only the reasonable expenses—
(A) of moving household goods and personal effects from the former residence to the new residence, and
(B) of traveling (including lodging) from the former residence to the new place of residence.
Such term shall not include any expenses for meals.
(2) Individuals other than taxpayer
In the case of any individual other than the taxpayer, expenses referred to in paragraph (1) shall be taken into account only if such individual has both the former residence and the new residence as his principal place of abode and is a member of the taxpayer's household.
(c) Conditions for allowance
No deduction shall be allowed under this section unless—
(1) the taxpayer's new principal place of work—
(A) is at least 50 miles farther from his former residence than was his former principal place of work, or
(B) if he had no former principal place of work, is at least 50 miles from his former residence, and
(2) either—
(A) during the 12-month period immediately following his arrival in the general location of his new principal place of work, the taxpayer is a full-time employee, in such general location, during at least 39 weeks, or
(B) during the 24-month period immediately following his arrival in the general location of his new principal place of work, the taxpayer is a full-time employee or performs services as a self-employed individual on a full-time basis, in such general location, during at least 78 weeks, of which not less than 39 weeks are during the 12-month period referred to in subparagraph (A).
For purposes of paragraph (1), the distance between two points shall be the shortest of the more commonly traveled routes between such two points.
(d) Rules for application of subsection (c)(2)
(1) The condition of subsection (c)(2) shall not apply if the taxpayer is unable to satisfy such condition by reason of—
(A) death or disability, or
(B) involuntary separation (other than for willful misconduct) from the service of, or transfer for the benefit of, an employer after obtaining full-time employment in which the taxpayer could reasonably have been expected to satisfy such condition.
(2) If a taxpayer has not satisfied the condition of subsection (c)(2) before the time prescribed by law (including extensions thereof) for filing the return for the taxable year during which he paid or incurred moving expenses which would otherwise be deductible under this section, but may still satisfy such condition, then such expenses may (at the election of the taxpayer) be deducted for such taxable year notwithstanding subsection (c)(2).
(3) If—
(A) for any taxable year moving expenses have been deducted in accordance with the rule provided in paragraph (2), and
(B) the condition of subsection (c)(2) cannot be satisfied at the close of a subsequent taxable year,
then an amount equal to the expenses which were so deducted shall be included in gross income for the first such subsequent taxable year.
[(e) Repealed. Pub. L. 103–66, title XIII, §13213(a)(2)(A), Aug. 10, 1993, 107 Stat. 473 ]
(f) Self-employed individual
For purposes of this section, the term "self-employed individual" means an individual who performs personal services—
(1) as the owner of the entire interest in an unincorporated trade or business, or
(2) as a partner in a partnership carrying on a trade or business.
(g) Rules for members of the Armed Forces of the United States
In the case of a member of the Armed Forces of the United States on active duty who moves pursuant to a military order and incident to a permanent change of station—
(1) the limitations under subsection (c) shall not apply;
(2) any moving and storage expenses which are furnished in kind (or for which reimbursement or an allowance is provided, but only to the extent of the expenses paid or incurred) to such member, his spouse, or his dependents, shall not be includible in gross income, and no reporting with respect to such expenses shall be required by the Secretary of Defense or the Secretary of Transportation, as the case may be; and
(3) if moving and storage expenses are furnished in kind (or if reimbursement or an allowance for such expenses is provided) to such member's spouse and his dependents with regard to moving to a location other than the one to which such member moves (or from a location other than the one from which such member moves), this section shall apply with respect to the moving expenses of his spouse and dependents—
(A) as if his spouse commenced work as an employee at a new principal place of work at such location; and
(B) without regard to the limitations under subsection (c).
(h) Special rules for foreign moves
(1) Allowance of certain storage fees
In the case of a foreign move, for purposes of this section, the moving expenses described in subsection (b)(1)(A) include the reasonable expenses—
(A) of moving household goods and personal effects to and from storage, and
(B) of storing such goods and effects for part or all of the period during which the new place of work continues to be the taxpayer's principal place of work.
(2) Foreign move
For purposes of this subsection, the term "foreign move" means the commencement of work by the taxpayer at a new principal place of work located outside the United States.
(3) United States defined
For purposes of this subsection and subsection (i), the term "United States" includes the possessions of the United States.
(i) Allowance of deductions in case of retirees or decedents who were working abroad
(1) In general
In the case of any qualified retiree moving expenses or qualified survivor moving expenses—
(A) this section (other than subsection (h)) shall be applied with respect to such expenses as if they were incurred in connection with the commencement of work by the taxpayer as an employee at a new principal place of work located within the United States, and
(B) the limitations of subsection (c)(2) shall not apply.
(2) Qualified retiree moving expenses
For purposes of paragraph (1), the term "qualified retiree moving expenses" means any moving expenses—
(A) which are incurred by an individual whose former principal place of work and former residence were outside the United States, and
(B) which are incurred for a move to a new residence in the United States in connection with the bona fide retirement of the individual.
(3) Qualified survivor moving expenses
For purposes of paragraph (1), the term "qualified survivor moving expenses" means moving expenses—
(A) which are paid or incurred by the spouse or any dependent of any decedent who (as of the time of his death) had a principal place of work outside the United States, and
(B) which are incurred for a move which begins within 6 months after the death of such decedent and which is to a residence in the United States from a former residence outside the United States which (as of the time of the decedent's death) was the residence of such decedent and the individual paying or incurring the expense.
(j) Regulations
The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section.
(k) Suspension of deduction for taxable years 2018 through 2025
Except in the case of an individual to whom subsection (g) applies, this section shall not apply to any taxable year beginning after December 31, 2017, and before January 1, 2026.
(Added
Editorial Notes
Prior Provisions
A prior section 217 was renumbered
Amendments
Subsec. (k).
1993—Subsec. (b).
Subsec. (c)(1).
Subsec. (e).
Subsec. (f).
"(1)
"(A) as the owner of the entire interest in an unincorporated trade or business, or
"(B) as a partner in a partnership carrying on a trade or business.
"(2)
Subsec. (g)(3).
Subsec. (h).
"(A) subsection (b)(1)(D) shall be applied by substituting '90 consecutive days' for '30 consecutive days',
"(B) subsection (b)(3)(A) shall be applied by substituting '$4,500' for '$1,500' and by substituting '$6,000' for '$3,000', and
"(C) subsection (b)(3)(B) shall be applied as if the last sentence of such subsection read as follows: 'In the case of a husband and wife filing separate returns, subparagraph (A) shall be applied by substituting "$2,250" for "$4,500", and by substituting "$3,000" for "$6,000".' "
1978—Subsecs. (h) to (j).
1976—Subsec. (b)(3)(A).
Subsec. (b)(3)(B).
Subsec. (c)(1)(A), (B).
Subsecs. (g), (h).
1969—
Statutory Notes and Related Subsidiaries
Effective Date of 2017 Amendment
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1978 Amendment; Election of Prior Law
Amendment by
Effective Date of 1976 Amendment
Effective Date of 1969 Amendment
"(1) section 217 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as amended by subsection (a)) shall not apply to any item to the extent that the taxpayer received or accrued reimbursement or other expense allowance for such item in a taxable year beginning on or before December 31, 1969, which was not included in his gross income; and
"(2) the amendments made by this section shall not apply (at the election of the taxpayer made at such time and manner as the Secretary of the Treasury or his delegate prescribes) with respect to moving expenses paid or incurred before January 1, 1971, in connection with the commencement of work by the taxpayer as an employee at a new principal place of work of which the taxpayer had been notified by his employer on or before December 19, 1969."
Effective Date
Section applicable to expenses incurred after Dec. 31, 1963, in taxable years ending after such date, see section 213(d) of
Moving Expenses of Members of the Uniformed Services
(1) enter into an agreement with the Secretary concerned under which the Secretary concerned would not be required to withhold tax on, or to report, moving expense reimbursements made to members of the armed forces;
(2) permit any taxpayer who was a member of the armed forces not to include in adjusted gross income the amount of any reimbursement in kind of moving expenses made by the Secretary concerned; and
(3) permit any taxpayer who was a member of the armed forces to deduct any amount paid by him as moving expenses in connection with any move required by the Secretary concerned, in excess of any reimbursement received for such expenses, without regard to the provisions of subsec. (c) of this section, to the extent it was otherwise deductible under this section.
[§218. Repealed. Pub. L. 95–600, title I, §113(a)(1), Nov. 6, 1978, 92 Stat. 2778 ]
Section, added
A prior section 218 was renumbered
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective with respect to contributions the payment of which is made after Dec. 31, 1978, in taxable years beginning after such date, see section 113(d) of
§219. Retirement savings
(a) Allowance of deduction
In the case of an individual, there shall be allowed as a deduction an amount equal to the qualified retirement contributions of the individual for the taxable year.
(b) Maximum amount of deduction
(1) In general
The amount allowable as a deduction under subsection (a) to any individual for any taxable year shall not exceed the lesser of—
(A) the deductible amount, or
(B) an amount equal to the compensation includible in the individual's gross income for such taxable year.
(2) Special rule for employer contributions under simplified employee pensions
This section shall not apply with respect to an employer contribution to a simplified employee pension.
(3) Plans under section 501(c)(18)
Notwithstanding paragraph (1), the amount allowable as a deduction under subsection (a) with respect to any contributions on behalf of an employee to a plan described in section 501(c)(18) shall not exceed the lesser of—
(A) $7,000, or
(B) an amount equal to 25 percent of the compensation (as defined in section 415(c)(3)) includible in the individual's gross income for such taxable year.
(4) Special rule for simple retirement accounts
This section shall not apply with respect to any amount contributed to a simple retirement account established under section 408(p).
(5) Deductible amount
For purposes of paragraph (1)(A)—
(A) In general
The deductible amount is $5,000.
(B) Catch-up contributions for individuals 50 or older
(i) In general
In the case of an individual who has attained the age of 50 before the close of the taxable year, the deductible amount for such taxable year shall be increased by the applicable amount.
(ii) Applicable amount
For purposes of clause (i), the applicable amount is $1,000.
(C) Cost-of-living adjustment
(i) In general
In the case of any taxable year beginning in a calendar year after 2008, the $5,000 amount under subparagraph (A) shall be increased by an amount equal to—
(I) such dollar amount, multiplied by
(II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting "calendar year 2007" for "calendar year 2016" in subparagraph (A)(ii) thereof.
(ii) Rounding rules
If any amount after adjustment under clause (i) is not a multiple of $500, such amount shall be rounded to the next lower multiple of $500.
(iii) Indexing of catch-up limitation
In the case of any taxable year beginning in a calendar year after 2023, the $1,000 amount under subparagraph (B)(ii) shall be increased by an amount equal to—
(I) such dollar amount, multiplied by
(II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting "calendar year 2022" for "calendar year 2016" in subparagraph (A)(ii) thereof.
If any amount after adjustment under the preceding sentence is not a multiple of $100, such amount shall be rounded to the next lower multiple of $100.
(c) Kay Bailey Hutchison Spousal IRA
(1) In general
In the case of an individual to whom this paragraph applies for the taxable year, the limitation of paragraph (1) of subsection (b) shall be equal to the lesser of—
(A) the dollar amount in effect under subsection (b)(1)(A) for the taxable year, or
(B) the sum of—
(i) the compensation includible in such individual's gross income for the taxable year, plus
(ii) the compensation includible in the gross income of such individual's spouse for the taxable year reduced by—
(I) the amount allowed as a deduction under subsection (a) to such spouse for such taxable year,
(II) the amount of any designated nondeductible contribution (as defined in section 408(o)) on behalf of such spouse for such taxable year, and
(III) the amount of any contribution on behalf of such spouse to a Roth IRA under section 408A for such taxable year.
(2) Individuals to whom paragraph (1) applies
Paragraph (1) shall apply to any individual if—
(A) such individual files a joint return for the taxable year, and
(B) the amount of compensation (if any) includible in such individual's gross income for the taxable year is less than the compensation includible in the gross income of such individual's spouse for the taxable year.
(d) Other limitations and restrictions
[(1) Repealed. Pub. L. 116–94, div. O, title I, §107(a), Dec. 20, 2019, 133 Stat. 3148 ]
(2) Recontributed amounts
No deduction shall be allowed under this section with respect to a rollover contribution described in section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16).
(3) Amounts contributed under endowment contract
In the case of an endowment contract described in section 408(b), no deduction shall be allowed under this section for that portion of the amounts paid under the contract for the taxable year which is properly allocable, under regulations prescribed by the Secretary, to the cost of life insurance.
(4) Denial of deduction for amount contributed to inherited annuities or accounts
No deduction shall be allowed under this section with respect to any amount paid to an inherited individual retirement account or individual retirement annuity (within the meaning of section 408(d)(3)(C)(ii)).
(e) Qualified retirement contribution
For purposes of this section, the term "qualified retirement contribution" means—
(1) any amount paid in cash for the taxable year by or on behalf of an individual to an individual retirement plan for such individual's benefit, and
(2) any amount contributed on behalf of any individual to a plan described in section 501(c)(18).
(f) Other definitions and special rules
(1) Compensation
For purposes of this section, the term "compensation" includes earned income (as defined in section 401(c)(2)). The term "compensation" does not include any amount received as a pension or annuity and does not include any amount received as deferred compensation. For purposes of this paragraph, section 401(c)(2) shall be applied as if the term trade or business for purposes of section 1402 included service described in subsection (c)(6). The term "compensation" includes any differential wage payment (as defined in section 3401(h)(2)). The term "compensation" shall include any amount which is included in the individual's gross income and paid to the individual to aid the individual in the pursuit of graduate or postdoctoral study.
(2) Married individuals
The maximum deduction under subsection (b) shall be computed separately for each individual, and this section shall be applied without regard to any community property laws.
(3) Time when contributions deemed made
For purposes of this section, a taxpayer shall be deemed to have made a contribution to an individual retirement plan on the last day of the preceding taxable year if the contribution is made on account of such taxable year and is made not later than the time prescribed by law for filing the return for such taxable year (not including extensions thereof).
[(4) Repealed. Pub. L. 113–295, div. A, title II, §221(a)(39)(A), Dec. 19, 2014, 128 Stat. 4043 ]
(5) Employer payments
For purposes of this title, any amount paid by an employer to an individual retirement plan shall be treated as payment of compensation to the employee (other than a self-employed individual who is an employee within the meaning of section 401(c)(1)) includible in his gross income in the taxable year for which the amount was contributed, whether or not a deduction for such payment is allowable under this section to the employee.
(6) Excess contributions treated as contribution made during subsequent year for which there is an unused limitation
(A) In general
If for the taxable year the maximum amount allowable as a deduction under this section for contributions to an individual retirement plan exceeds the amount contributed, then the taxpayer shall be treated as having made an additional contribution for the taxable year in an amount equal to the lesser of—
(i) the amount of such excess, or
(ii) the amount of the excess contributions for such taxable year (determined under section 4973(b)(2) without regard to subparagraph (C) thereof).
(B) Amount contributed
For purposes of this paragraph, the amount contributed—
(i) shall be determined without regard to this paragraph, and
(ii) shall not include any rollover contribution.
(C) Special rule where excess deduction was allowed for closed year
Proper reduction shall be made in the amount allowable as a deduction by reason of this paragraph for any amount allowed as a deduction under this section for a prior taxable year for which the period for assessing deficiency has expired if the amount so allowed exceeds the amount which should have been allowed for such prior taxable year.
(7) Special rule for compensation earned by members of the Armed Forces for service in a combat zone.
For purposes of subsections (b)(1)(B) and (c), the amount of compensation includible in an individual's gross income shall be determined without regard to section 112.
(8) Election not to deduct contributions
For election not to deduct contributions to individual retirement plans, see section 408(o)(2)(B)(ii).
(g) Limitation on deduction for active participants in certain pension plans
(1) In general
If (for any part of any plan year ending with or within a taxable year) an individual or the individual's spouse is an active participant, each of the dollar limitations contained in subsections (b)(1)(A) and (c)(1)(A) for such taxable year shall be reduced (but not below zero) by the amount determined under paragraph (2).
(2) Amount of reduction
(A) In general
The amount determined under this paragraph with respect to any dollar limitation shall be the amount which bears the same ratio to such limitation as—
(i) the excess of—
(I) the taxpayer's adjusted gross income for such taxable year, over
(II) the applicable dollar amount, bears to
(ii) $10,000 ($20,000 in the case of a joint return).
(B) No reduction below $200 until complete phase-out
No dollar limitation shall be reduced below $200 under paragraph (1) unless (without regard to this subparagraph) such limitation is reduced to zero.
(C) Rounding
Any amount determined under this paragraph which is not a multiple of $10 shall be rounded to the next lowest $10.
(3) Adjusted gross income; applicable dollar amount
For purposes of this subsection—
(A) Adjusted gross income
Adjusted gross income of any taxpayer shall be determined—
(i) after application of sections 86 and 469, and
(ii) without regard to sections 85(c), 135, 137, 221, and 911 or the deduction allowable under this section.
(B) Applicable dollar amount
The term "applicable dollar amount" means the following:
(i) In the case of a taxpayer filing a joint return, $80,000.
(ii) In the case of any other taxpayer (other than a married individual filing a separate return), $50,000.
(iii) In the case of a married individual filing a separate return, zero.
(4) Special rule for married individuals filing separately and living apart
A husband and wife who—
(A) file separate returns for any taxable year, and
(B) live apart at all times during such taxable year,
shall not be treated as married individuals for purposes of this subsection.
(5) Active participant
For purposes of this subsection, the term "active participant" means, with respect to any plan year, an individual—
(A) who is an active participant in—
(i) a plan described in section 401(a) which includes a trust exempt from tax under section 501(a),
(ii) an annuity plan described in section 403(a),
(iii) a plan established for its employees by the United States, by a State or political subdivision thereof, or by an agency or instrumentality of any of the foregoing,
(iv) an annuity contract described in section 403(b),
(v) a simplified employee pension (within the meaning of section 408(k)), or
(vi) any simple retirement account (within the meaning of section 408(p)), or
(B) who makes deductible contributions to a trust described in section 501(c)(18).
The determination of whether an individual is an active participant shall be made without regard to whether or not such individual's rights under a plan, trust, or contract are nonforfeitable. An eligible deferred compensation plan (within the meaning of section 457(b)) shall not be treated as a plan described in subparagraph (A)(iii).
(6) Certain individuals not treated as active participants
For purposes of this subsection, any individual described in any of the following subparagraphs shall not be treated as an active participant for any taxable year solely because of any participation so described:
(A) Members of reserve components
Participation in a plan described in subparagraph (A)(iii) of paragraph (5) by reason of service as a member of a reserve component of the Armed Forces (as defined in
(B) Volunteer firefighters
A volunteer firefighter—
(i) who is a participant in a plan described in subparagraph (A)(iii) of paragraph (5) based on his activity as a volunteer firefighter, and
(ii) whose accrued benefit as of the beginning of the taxable year is not more than an annual benefit of $1,800 (when expressed as a single life annuity commencing at age 65).
(7) Special rule for spouses who are not active participants
If this subsection applies to an individual for any taxable year solely because their spouse is an active participant, then, in applying this subsection to the individual (but not their spouse)—
(A) the applicable dollar amount under paragraph (3)(B)(i) shall be $150,000; and
(B) the amount applicable under paragraph (2)(A)(ii) shall be $10,000.
(8) Inflation adjustment
In the case of any taxable year beginning in a calendar year after 2006, each of the dollar amounts in paragraphs (3)(B)(i), (3)(B)(ii), and (7)(A) shall be increased by an amount equal to—
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting "calendar year 2005" for "calendar year 2016" in subparagraph (A)(ii) thereof.
Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $1,000.
(Added
Inflation Adjusted Items for Certain Years
For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under
Editorial Notes
Prior Provisions
A prior section 219 was renumbered
Amendments
2022—Subsec. (b)(5)(C)(iii).
2021—Subsec. (g)(3)(A)(ii).
2020—Subsec. (g)(3)(A)(ii).
2019—Subsec. (d)(1).
Subsec. (f)(1).
2018—Subsec. (f)(1).
Subsec. (g)(8).
2017—Subsec. (b)(5)(C)(i)(II).
Subsec. (f)(1).
Subsec. (g)(3)(A)(ii).
Subsec. (g)(8)(B).
2014—Subsec. (b)(5)(A).
Subsec. (b)(5)(B)(ii).
Subsec. (b)(5)(C), (D).
Subsec. (f)(4).
Subsec. (g)(2)(A)(ii).
Subsec. (g)(3)(B)(i), (ii).
Subsec. (g)(8).
Subsec. (h).
2013—Subsec. (c).
2008—Subsec. (f)(1).
2006—Subsec. (b)(5)(C), (D).
Subsec. (f)(7), (8).
Subsec. (g)(8).
2004—Subsec. (g)(3)(A)(ii).
2001—Subsec. (b)(1)(A).
Subsec. (b)(5).
Subsec. (d)(2).
Subsec. (g)(3)(A)(ii).
2000—Subsec. (c)(1)(B)(ii)(II), (III).
1998—Subsec. (g)(1).
Subsec. (g)(2)(A)(ii).
Subsec. (g)(3)(A)(ii).
Subsec. (g)(7).
"(A) the applicable dollar amount under paragraph (3)(B)(i) with respect to the taxpayer shall be $150,000, and
"(B) the amount applicable under paragraph (2)(A)(ii) shall be $10,000."
1997—Subsec. (c)(1)(B)(ii).
Subsec. (g)(1).
Subsec. (g)(2)(A)(ii).
Subsec. (g)(3)(B).
"(i) in the case of a taxpayer filing a joint return, $40,000,
"(ii) in the case of any other taxpayer (other than a married individual filing a separate return), $25,000, and
"(iii) in the case of a married individual filing a separate return, zero."
Subsec. (g)(7).
1996—Subsec. (b)(4).
Subsec. (c).
Subsec. (f)(2).
Subsec. (g)(1).
Subsec. (g)(3)(A)(ii).
Subsec. (g)(5)(A)(vi).
1994—Subsec. (g)(6)(A).
1992—Subsec. (d)(2).
1989—Subsec. (f)(1).
Subsec. (g)(3)(A)(ii).
1988—Subsec. (g)(3)(A)(ii).
Subsec. (g)(4).
1986—Subsec. (b)(2).
Subsec. (b)(2)(C).
Subsec. (b)(3).
"(A) the amount determined under paragraph (1) for such taxable year, reduced by
"(B) the amount of the qualified voluntary employee contributions for the taxable year."
Subsec. (c)(1)(B).
Subsec. (c)(2)(B).
Subsec. (e).
Subsec. (f)(1).
Subsec. (f)(3).
Subsec. (f)(7).
Subsec. (g).
Subsec. (h).
1984—Subsec. (b)(2)(A)(ii).
Subsec. (b)(4).
Subsec. (b)(4)(B).
Subsec. (d)(2).
Subsec. (e)(1).
Subsec. (e)(3).
Subsec. (f)(1).
Subsec. (f)(3)(A).
1983—Subsec. (b)(2)(A).
Subsec. (c)(2)(B).
Subsec. (d)(1).
Subsec. (e)(3)(D), (E).
Subsec. (f)(1).
Subsec. (f)(3)(B).
1982—Subsec. (d)(4).
1981—Subsec. (a).
Subsec. (b).
Subsec. (b)(1).
Subsec. (b)(2)(A)(ii), (C).
Subsec. (b)(3) to (5).
Subsec. (b)(6).
Subsec. (b)(7).
Subsec. (c).
Subsec. (d).
Subsec. (d)(1).
Subsec. (d)(2).
Subsec. (d)(3).
Subsec. (e).
Subsec. (f)(1).
Subsec. (f)(2).
Subsec. (f)(3).
Subsec. (f)(4).
Subsec. (f)(5).
Subsec. (f)(6).
Subsec. (g).
1980—Subsec. (b)(4).
Subsec. (b)(7).
1978—Subsec. (b)(4).
Subsec. (b)(7).
Subsec. (c)(3).
Subsec. (c)(4).
Subsec. (c)(5).
1976—Subsec. (a).
Subsec. (b)(2)(A)(iv).
Subsec. (b)(5).
Subsec. (b)(6).
Subsec. (c)(2).
Subsec. (c)(3).
Subsec. (c)(4).
Statutory Notes and Related Subsidiaries
Effective Date of 2022 Amendment
Effective Date of 2021 Amendment
Amendment by
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2019 Amendment
"(1)
"(2)
Effective Date of 2017 Amendment
Amendment by section 11002(d)(1)(S) of
Amendment by section 11051(b)(3)(C) of
Amendment by section 13305(b)(1) of
Effective Date of 2014 Amendment
Amendment by
Effective Date of 2008 Amendment
Effective Date of 2006 Amendment
Amendment by section 833(b) of
Effective Date of 2004 Amendment
Amendment by
Effective Date of 2001 Amendment
Amendment by section 431(c)(1) of
Amendment by section 641(e)(2) of
Effective Date of 2000 Amendment
Amendment by
Effective Date of 1998 Amendments
Amendment by
Amendment by section 6018(f)(2) of
Amendment by section 6005(a) of
Effective Date of 1997 Amendment
Effective Date of 1996 Amendment
Amendment by section 1421(b)(1) of
Amendment by section 1807(c)(3) of
Effective Date of 1994 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1989 Amendment
Amendment by section 7816(c)(1) of
Effective Date of 1988 Amendment
"(A) Except as provided in subparagraph (B), the amendment made by paragraph (1) [amending this section] shall apply to taxable years beginning after December 31, 1987.
"(B) A taxpayer may elect to have the amendment made by paragraph (1) apply to any taxable year beginning in 1987."
Amendment by section 6009(c)(2) of
Effective Date of 1986 Amendment
Amendment by section 301(b)(4) of
Amendment by section 1101(a), (b)(1), (2)(A) of
"(1)
"(2)
Amendment by section 1501(d)(1)(B) of
Amendment by section 1875(c)(4), (6)(B) of
Effective Date of 1984 Amendment
"(1)
"(2)
"(1)
"(2)
"(3)
Amendment by section 491(d)(6)–(8) of
Amendment by section 713(d)(2) of
Effective Date of 1983 Amendment
Amendment by
Effective Date of 1982 Amendment
Amendment by
Effective Date of 1981 Amendment
"(1)
"(2)
"(3)
"(4)
"(5)
"(A)
"(B)
Amendment by section 312(c)(1) of
Effective Date of 1980 Amendment
Amendment by
Effective Date of 1978 Amendment
Amendment by section 152(c) of
Amendment by section 156(c)(3) of
Effective Date of 1976 Amendment
Amendment by section 1501(b)(4) of
Amendment by section 1901(a)(32) of
Effective Date
Contributions for Taxable Years Ending Before May 29, 2006
"(1)
"(2)
"(A)
"(B)
"(3)
Clarification of Treatment of Federal Judges
"(a)
"(1) shall be treated as an active participant in a plan established for its employees by the United States for purposes of section 219(g) of the Internal Revenue Code of 1986, and
"(2) shall be treated as an employee for purposes of
"(b)
Plan Amendments Not Required Until January 1, 1998
For provisions directing that if any amendments made by subtitle D [§§1401–1465] of title I of
Plan Amendments Not Required Until January 1, 1994
For provisions directing that if any amendments made by subtitle B [§§521–523] of title V of
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1800–1899A] of
Transitional Rules for Allowable Deductions for First Taxable Year Beginning in 1978
§220. Archer MSAs
(a) Deduction allowed
In the case of an individual who is an eligible individual for any month during the taxable year, there shall be allowed as a deduction for the taxable year an amount equal to the aggregate amount paid in cash during such taxable year by such individual to an Archer MSA of such individual.
(b) Limitations
(1) In general
The amount allowable as a deduction under subsection (a) to an individual for the taxable year shall not exceed the sum of the monthly limitations for months during such taxable year that the individual is an eligible individual.
(2) Monthly limitation
The monthly limitation for any month is the amount equal to 1/12 of—
(A) in the case of an individual who has self-only coverage under the high deductible health plan as of the first day of such month, 65 percent of the annual deductible under such coverage, and
(B) in the case of an individual who has family coverage under the high deductible health plan as of the first day of such month, 75 percent of the annual deductible under such coverage.
(3) Special rule for married individuals
In the case of individuals who are married to each other, if either spouse has family coverage—
(A) both spouses shall be treated as having only such family coverage (and if such spouses each have family coverage under different plans, as having the family coverage with the lowest annual deductible), and
(B) the limitation under paragraph (1) (after the application of subparagraph (A) of this paragraph) shall be divided equally between them unless they agree on a different division.
(4) Deduction not to exceed compensation
(A) Employees
The deduction allowed under subsection (a) for contributions as an eligible individual described in subclause (I) of subsection (c)(1)(A)(iii) shall not exceed such individual's wages, salaries, tips, and other employee compensation which are attributable to such individual's employment by the employer referred to in such subclause.
(B) Self-employed individuals
The deduction allowed under subsection (a) for contributions as an eligible individual described in subclause (II) of subsection (c)(1)(A)(iii) shall not exceed such individual's earned income (as defined in section 401(c)(1)) derived by the taxpayer from the trade or business with respect to which the high deductible health plan is established.
(C) Community property laws not to apply
The limitations under this paragraph shall be determined without regard to community property laws.
(5) Coordination with exclusion for employer contributions
No deduction shall be allowed under this section for any amount paid for any taxable year to an Archer MSA of an individual if—
(A) any amount is contributed to any Archer MSA of such individual for such year which is excludable from gross income under section 106(b), or
(B) if such individual's spouse is covered under the high deductible health plan covering such individual, any amount is contributed for such year to any Archer MSA of such spouse which is so excludable.
(6) Denial of deduction to dependents
No deduction shall be allowed under this section to any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual's taxable year begins.
(7) Medicare eligible individuals
The limitation under this subsection for any month with respect to an individual shall be zero for the first month such individual is entitled to benefits under title XVIII of the Social Security Act and for each month thereafter.
(c) Definitions
For purposes of this section—
(1) Eligible individual
(A) In general
The term "eligible individual" means, with respect to any month, any individual if—
(i) such individual is covered under a high deductible health plan as of the 1st day of such month,
(ii) such individual is not, while covered under a high deductible health plan, covered under any health plan—
(I) which is not a high deductible health plan, and
(II) which provides coverage for any benefit which is covered under the high deductible health plan, and
(iii)(I) the high deductible health plan covering such individual is established and maintained by the employer of such individual or of the spouse of such individual and such employer is a small employer, or
(II) such individual is an employee (within the meaning of section 401(c)(1)) or the spouse of such an employee and the high deductible health plan covering such individual is not established or maintained by any employer of such individual or spouse.
(B) Certain coverage disregarded
Subparagraph (A)(ii) shall be applied without regard to—
(i) coverage for any benefit provided by permitted insurance, and
(ii) coverage (whether through insurance or otherwise) for accidents, disability, dental care, vision care, or long-term care.
(C) Continued eligibility of employee and spouse establishing Archer MSAs
If, while an employer is a small employer—
(i) any amount is contributed to an Archer MSA of an individual who is an employee of such employer or the spouse of such an employee, and
(ii) such amount is excludable from gross income under section 106(b) or allowable as a deduction under this section,
such individual shall not cease to meet the requirement of subparagraph (A)(iii)(I) by reason of such employer ceasing to be a small employer so long as such employee continues to be an employee of such employer.
(D) Limitations on eligibility
For limitations on number of taxpayers who are eligible to have Archer MSAs, see subsection (i).
(2) High deductible health plan
(A) In general
The term "high deductible health plan" means a health plan—
(i) in the case of self-only coverage, which has an annual deductible which is not less than $1,500 and not more than $2,250,
(ii) in the case of family coverage, which has an annual deductible which is not less than $3,000 and not more than $4,500, and
(iii) the annual out-of-pocket expenses required to be paid under the plan (other than for premiums) for covered benefits does not exceed—
(I) $3,000 for self-only coverage, and
(II) $5,500 for family coverage.
(B) Special rules
(i) Exclusion of certain plans
Such term does not include a health plan if substantially all of its coverage is coverage described in paragraph (1)(B).
(ii) Safe harbor for absence of preventive care deductible
A plan shall not fail to be treated as a high deductible health plan by reason of failing to have a deductible for preventive care if the absence of a deductible for such care is required by State law.
(3) Permitted insurance
The term "permitted insurance" means—
(A) insurance if substantially all of the coverage provided under such insurance relates to—
(i) liabilities incurred under workers' compensation laws,
(ii) tort liabilities,
(iii) liabilities relating to ownership or use of property, or
(iv) such other similar liabilities as the Secretary may specify by regulations,
(B) insurance for a specified disease or illness, and
(C) insurance paying a fixed amount per day (or other period) of hospitalization.
(4) Small employer
(A) In general
The term "small employer" means, with respect to any calendar year, any employer if such employer employed an average of 50 or fewer employees on business days during either of the 2 preceding calendar years. For purposes of the preceding sentence, a preceding calendar year may be taken into account only if the employer was in existence throughout such year.
(B) Employers not in existence in preceding year
In the case of an employer which was not in existence throughout the 1st preceding calendar year, the determination under subparagraph (A) shall be based on the average number of employees that it is reasonably expected such employer will employ on business days in the current calendar year.
(C) Certain growing employers retain treatment as small employer
The term "small employer" includes, with respect to any calendar year, any employer if—
(i) such employer met the requirement of subparagraph (A) (determined without regard to subparagraph (B)) for any preceding calendar year after 1996,
(ii) any amount was contributed to the Archer MSA of any employee of such employer with respect to coverage of such employee under a high deductible health plan of such employer during such preceding calendar year and such amount was excludable from gross income under section 106(b) or allowable as a deduction under this section, and
(iii) such employer employed an average of 200 or fewer employees on business days during each preceding calendar year after 1996.
(D) Special rules
(i) Controlled groups
For purposes of this paragraph, all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as 1 employer.
(ii) Predecessors
Any reference in this paragraph to an employer shall include a reference to any predecessor of such employer.
(5) Family coverage
The term "family coverage" means any coverage other than self-only coverage.
(d) Archer MSA
For purposes of this section—
(1) Archer MSA
The term "Archer MSA" means a trust created or organized in the United States as a medical savings account exclusively for the purpose of paying the qualified medical expenses of the account holder, but only if the written governing instrument creating the trust meets the following requirements:
(A) Except in the case of a rollover contribution described in subsection (f)(5), no contribution will be accepted—
(i) unless it is in cash, or
(ii) to the extent such contribution, when added to previous contributions to the trust for the calendar year, exceeds 75 percent of the highest annual limit deductible permitted under subsection (c)(2)(A)(ii) for such calendar year.
(B) The trustee is a bank (as defined in section 408(n)), an insurance company (as defined in section 816), or another person who demonstrates to the satisfaction of the Secretary that the manner in which such person will administer the trust will be consistent with the requirements of this section.
(C) No part of the trust assets will be invested in life insurance contracts.
(D) The assets of the trust will not be commingled with other property except in a common trust fund or common investment fund.
(E) The interest of an individual in the balance in his account is nonforfeitable.
(2) Qualified medical expenses
(A) In general
The term "qualified medical expenses" means, with respect to an account holder, amounts paid by such holder for medical care (as defined in section 213(d)) for such individual, the spouse of such individual, and any dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof) of such individual, but only to the extent such amounts are not compensated for by insurance or otherwise. For purposes of this subparagraph, amounts paid for menstrual care products (as defined in section 223(d)(2)(D)) shall be treated as paid for medical care.
(B) Health insurance may not be purchased from account
(i) In general
Subparagraph (A) shall not apply to any payment for insurance.
(ii) Exceptions
Clause (i) shall not apply to any expense for coverage under—
(I) a health plan during any period of continuation coverage required under any Federal law,
(II) a qualified long-term care insurance contract (as defined in section 7702B(b)), or
(III) a health plan during a period in which the individual is receiving unemployment compensation under any Federal or State law.
(C) Medical expenses of individuals who are not eligible individuals
Subparagraph (A) shall apply to an amount paid by an account holder for medical care of an individual who is not described in clauses (i) and (ii) of subsection (c)(1)(A) for the month in which the expense for such care is incurred only if no amount is contributed (other than a rollover contribution) to any Archer MSA of such account holder for the taxable year which includes such month. This subparagraph shall not apply to any expense for coverage described in subclause (I) or (III) of subparagraph (B)(ii).
(3) Account holder
The term "account holder" means the individual on whose behalf the Archer MSA was established.
(4) Certain rules to apply
Rules similar to the following rules shall apply for purposes of this section:
(A) Section 219(d)(2) (relating to no deduction for rollovers).
(B) Section 219(f)(3) (relating to time when contributions deemed made).
(C) Except as provided in section 106(b), section 219(f)(5) (relating to employer payments).
(D) Section 408(g) (relating to community property laws).
(E) Section 408(h) (relating to custodial accounts).
(e) Tax treatment of accounts
(1) In general
An Archer MSA is exempt from taxation under this subtitle unless such account has ceased to be an Archer MSA. Notwithstanding the preceding sentence, any such account is subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable, etc. organizations).
(2) Account terminations
Rules similar to the rules of paragraphs (2) and (4) of section 408(e) shall apply to Archer MSAs, and any amount treated as distributed under such rules shall be treated as not used to pay qualified medical expenses.
(f) Tax treatment of distributions
(1) Amounts used for qualified medical expenses
Any amount paid or distributed out of an Archer MSA which is used exclusively to pay qualified medical expenses of any account holder shall not be includible in gross income.
(2) Inclusion of amounts not used for qualified medical expenses
Any amount paid or distributed out of an Archer MSA which is not used exclusively to pay the qualified medical expenses of the account holder shall be included in the gross income of such holder.
(3) Excess contributions returned before due date of return
(A) In general
If any excess contribution is contributed for a taxable year to any Archer MSA of an individual, paragraph (2) shall not apply to distributions from the Archer MSAs of such individual (to the extent such distributions do not exceed the aggregate excess contributions to all such accounts of such individual for such year) if—
(i) such distribution is received by the individual on or before the last day prescribed by law (including extensions of time) for filing such individual's return for such taxable year, and
(ii) such distribution is accompanied by the amount of net income attributable to such excess contribution.
Any net income described in clause (ii) shall be included in the gross income of the individual for the taxable year in which it is received.
(B) Excess contribution
For purposes of subparagraph (A), the term "excess contribution" means any contribution (other than a rollover contribution) which is neither excludable from gross income under section 106(b) nor deductible under this section.
(4) Additional tax on distributions not used for qualified medical expenses
(A) In general
The tax imposed by this chapter on the account holder for any taxable year in which there is a payment or distribution from an Archer MSA of such holder which is includible in gross income under paragraph (2) shall be increased by 20 percent of the amount which is so includible.
(B) Exception for disability or death
Subparagraph (A) shall not apply if the payment or distribution is made after the account holder becomes disabled within the meaning of section 72(m)(7) or dies.
(C) Exception for distributions after medicare eligibility
Subparagraph (A) shall not apply to any payment or distribution after the date on which the account holder attains the age specified in section 1811 of the Social Security Act.
(5) Rollover contribution
An amount is described in this paragraph as a rollover contribution if it meets the requirements of subparagraphs (A) and (B).
(A) In general
Paragraph (2) shall not apply to any amount paid or distributed from an Archer MSA to the account holder to the extent the amount received is paid into an Archer MSA or a health savings account (as defined in section 223(d)) for the benefit of such holder not later than the 60th day after the day on which the holder receives the payment or distribution.
(B) Limitation
This paragraph shall not apply to any amount described in subparagraph (A) received by an individual from an Archer MSA if, at any time during the 1-year period ending on the day of such receipt, such individual received any other amount described in subparagraph (A) from an Archer MSA which was not includible in the individual's gross income because of the application of this paragraph.
(6) Coordination with medical expense deduction
For purposes of determining the amount of the deduction under section 213, any payment or distribution out of an Archer MSA for qualified medical expenses shall not be treated as an expense paid for medical care.
(7) Transfer of account incident to divorce
The transfer of an individual's interest in an Archer MSA to an individual's spouse or former spouse under a divorce or separation instrument described in clause (i) of section 121(d)(3)(C) shall not be considered a taxable transfer made by such individual notwithstanding any other provision of this subtitle, and such interest shall, after such transfer, be treated as an Archer MSA with respect to which such spouse is the account holder.
(8) Treatment after death of account holder
(A) Treatment if designated beneficiary is spouse
If the account holder's surviving spouse acquires such holder's interest in an Archer MSA by reason of being the designated beneficiary of such account at the death of the account holder, such Archer MSA shall be treated as if the spouse were the account holder.
(B) Other cases
(i) In general
If, by reason of the death of the account holder, any person acquires the account holder's interest in an Archer MSA in a case to which subparagraph (A) does not apply—
(I) such account shall cease to be an Archer MSA as of the date of death, and
(II) an amount equal to the fair market value of the assets in such account on such date shall be includible if such person is not the estate of such holder, in such person's gross income for the taxable year which includes such date, or if such person is the estate of such holder, in such holder's gross income for the last taxable year of such holder.
(ii) Special rules
(I) Reduction of inclusion for pre-death expenses
The amount includible in gross income under clause (i) by any person (other than the estate) shall be reduced by the amount of qualified medical expenses which were incurred by the decedent before the date of the decedent's death and paid by such person within 1 year after such date.
(II) Deduction for estate taxes
An appropriate deduction shall be allowed under section 691(c) to any person (other than the decedent or the decedent's spouse) with respect to amounts included in gross income under clause (i) by such person.
(g) Cost-of-living adjustment
In the case of any taxable year beginning in a calendar year after 1998, each dollar amount in subsection (c)(2) shall be increased by an amount equal to—
(1) such dollar amount, multiplied by
(2) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which such taxable year begins by substituting "calendar year 1997" for "calendar year 2016" in subparagraph (A)(ii) thereof.
If any increase under the preceding sentence is not a multiple of $50, such increase shall be rounded to the nearest multiple of $50.
(h) Reports
The Secretary may require the trustee of an Archer MSA to make such reports regarding such account to the Secretary and to the account holder with respect to contributions, distributions, and such other matters as the Secretary determines appropriate. The reports required by this subsection shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required by the Secretary.
(i) Limitation on number of taxpayers having Archer MSAs
(1) In general
Except as provided in paragraph (5), no individual shall be treated as an eligible individual for any taxable year beginning after the cut-off year unless—
(A) such individual was an active MSA participant for any taxable year ending on or before the close of the cut-off year, or
(B) such individual first became an active MSA participant for a taxable year ending after the cut-off year by reason of coverage under a high deductible health plan of an MSA-participating employer.
(2) Cut-off year
For purposes of paragraph (1), the term "cut-off year" means the earlier of—
(A) calendar year 2007, or
(B) the first calendar year before 2007 for which the Secretary determines under subsection (j) that the numerical limitation for such year has been exceeded.
(3) Active MSA participant
For purposes of this subsection—
(A) In general
The term "active MSA participant" means, with respect to any taxable year, any individual who is the account holder of any Archer MSA into which any contribution was made which was excludable from gross income under section 106(b), or allowable as a deduction under this section, for such taxable year.
(B) Special rule for cut-off years before 2007
In the case of a cut-off year before 2007—
(i) an individual shall not be treated as an eligible individual for any month of such year or an active MSA participant under paragraph (1)(A) unless such individual is, on or before the cut-off date, covered under a high deductible health plan, and
(ii) an employer shall not be treated as an MSA-participating employer unless the employer, on or before the cut-off date, offered coverage under a high deductible health plan to any employee.
(C) Cut-off date
For purposes of subparagraph (B)—
(i) In general
Except as otherwise provided in this subparagraph, the cut-off date is October 1 of the cut-off year.
(ii) Employees with enrollment periods after October 1
In the case of an individual described in subclause (I) of subsection (c)(1)(A)(iii), if the regularly scheduled enrollment period for health plans of the individual's employer occurs during the last 3 months of the cut-off year, the cut-off date is December 31 of the cut-off year.
(iii) Self-employed individuals
In the case of an individual described in subclause (II) of subsection (c)(1)(A)(iii), the cut-off date is November 1 of the cut-off year.
(iv) Special rules for 1997
If 1997 is a cut-off year by reason of subsection (j)(1)(A)—
(I) each of the cut-off dates under clauses (i) and (iii) shall be 1 month earlier than the date determined without regard to this clause, and
(II) clause (ii) shall be applied by substituting "4 months" for "3 months".
(4) MSA-participating employer
For purposes of this subsection, the term "MSA-participating employer" means any small employer if—
(A) such employer made any contribution to the Archer MSA of any employee during the cut-off year or any preceding calendar year which was excludable from gross income under section 106(b), or
(B) at least 20 percent of the employees of such employer who are eligible individuals for any month of the cut-off year by reason of coverage under a high deductible health plan of such employer each made a contribution of at least $100 to their Archer MSAs for any taxable year ending with or within the cut-off year which was allowable as a deduction under this section.
(5) Additional eligibility after cut-off year
If the Secretary determines under subsection (j)(2)(A) that the numerical limit for the calendar year following a cut-off year described in paragraph (2)(B) has not been exceeded—
(A) this subsection shall not apply to any otherwise eligible individual who is covered under a high deductible health plan during the first 6 months of the second calendar year following the cut-off year (and such individual shall be treated as an active MSA participant for purposes of this subsection if a contribution is made to any Archer MSA with respect to such coverage), and
(B) any employer who offers coverage under a high deductible health plan to any employee during such 6-month period shall be treated as an MSA-participating employer for purposes of this subsection if the requirements of paragraph (4) are met with respect to such coverage.
For purposes of this paragraph, subsection (j)(2)(A) shall be applied for 1998 by substituting "750,000" for "600,000".
(j) Determination of whether numerical limits are exceeded
(1) Determination of whether limit exceeded for 1997
The numerical limitation for 1997 is exceeded if, based on the reports required under paragraph (4), the number of Archer MSAs established as of—
(A) April 30, 1997, exceeds 375,000, or
(B) June 30, 1997, exceeds 525,000.
(2) Determination of whether limit exceeded for 1998, 1999, 2001, 2002, 2004, 2005, or 2006
(A) In general
The numerical limitation for 1998, 1999, 2001, 2002, 2004, 2005, or 2006 is exceeded if the sum of—
(i) the number of MSA returns filed on or before April 15 of such calendar year for taxable years ending with or within the preceding calendar year, plus
(ii) the Secretary's estimate (determined on the basis of the returns described in clause (i)) of the number of MSA returns for such taxable years which will be filed after such date,
exceeds 750,000 (600,000 in the case of 1998). For purposes of the preceding sentence, the term "MSA return" means any return on which any exclusion is claimed under section 106(b) or any deduction is claimed under this section.
(B) Alternative computation of limitation
The numerical limitation for 1998, 1999, 2001, 2002, 2004, 2005, or 2006 is also exceeded if the sum of—
(i) 90 percent of the sum determined under subparagraph (A) for such calendar year, plus
(ii) the product of 2.5 and the number of Archer MSAs established during the portion of such year preceding July 1 (based on the reports required under paragraph (4)) for taxable years beginning in such year,
exceeds 750,000.
(C) No limitation for 2000 or 2003
The numerical limitation shall not apply for 2000 or 2003.
(3) Previously uninsured individuals not included in determination
(A) In general
The determination of whether any calendar year is a cut-off year shall be made by not counting the Archer MSA of any previously uninsured individual.
(B) Previously uninsured individual
For purposes of this subsection, the term "previously uninsured individual" means, with respect to any Archer MSA, any individual who had no health plan coverage (other than coverage referred to in subsection (c)(1)(B)) at any time during the 6-month period before the date such individual's coverage under the high deductible health plan commences.
(4) Reporting by MSA trustees
(A) In general
Not later than August 1 of 1997, 1998, 1999, 2001, 2002, 2004, 2005, and 2006, each person who is the trustee of an Archer MSA established before July 1 of such calendar year shall make a report to the Secretary (in such form and manner as the Secretary shall specify) which specifies—
(i) the number of Archer MSAs established before such July 1 (for taxable years beginning in such calendar year) of which such person is the trustee,
(ii) the name and TIN of the account holder of each such account, and
(iii) the number of such accounts which are accounts of previously uninsured individuals.
(B) Additional report for 1997
Not later than June 1, 1997, each person who is the trustee of an Archer MSA established before May 1, 1997, shall make an additional report described in subparagraph (A) but only with respect to accounts established before May 1, 1997.
(C) Penalty for failure to file report
The penalty provided in section 6693(a) shall apply to any report required by this paragraph, except that—
(i) such section shall be applied by substituting "$25" for "$50", and
(ii) the maximum penalty imposed on any trustee shall not exceed $5,000.
(D) Aggregation of accounts
To the extent practicable, in determining the number of Archer MSAs on the basis of the reports under this paragraph, all Archer MSAs of an individual shall be treated as 1 account and all accounts of individuals who are married to each other shall be treated as 1 account.
(5) Date of making determinations
Any determination under this subsection that a calendar year is a cut-off year shall be made by the Secretary and shall be published not later than October 1 of such year.
(Added
Inflation Adjusted Items for Certain Years
For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under
Editorial Notes
References in Text
The Social Security Act, referred to in subsecs. (b)(7) and (f)(4)(C), is act Aug. 14, 1935, ch. 531,
Prior Provisions
A prior section 220 was renumbered 224 of this title.
Another prior section 220, added
Another prior section 220, added
Amendments
2020—Subsec. (d)(2)(A).
2017—Subsec. (f)(7).
Subsec. (g)(2).
2010—Subsec. (d)(2)(A).
Subsec. (f)(4)(A).
2006—Subsec. (i)(2), (3)(B).
Subsec. (j)(2).
Subsec. (j)(4)(A).
2004—Subsec. (d)(2)(A).
Subsec. (i)(2), (3)(B).
Subsec. (j)(2).
Subsec. (j)(2)(A), (B).
Subsec. (j)(2)(C).
Subsec. (j)(4)(A).
2003—Subsec. (f)(5)(A).
2002—Subsec. (i)(2).
Subsec. (i)(3)(B).
Subsec. (j)(2).
Subsec. (j)(4)(A).
2000—
Subsecs. (a), (b)(5).
Subsec. (c)(1)(C).
Subsec. (c)(1)(C)(i).
Subsec. (c)(1)(D).
Subsec. (c)(4)(C)(ii).
Subsec. (d).
Subsec. (d)(1).
Subsec. (d)(2)(C), (3).
Subsec. (e)(1).
Subsec. (e)(2).
Subsec. (f).
Subsec. (h).
Subsec. (i).
Subsec. (i)(2)(A), (B).
Subsec. (i)(3)(A).
Subsec. (i)(3)(B).
Subsec. (i)(4)(A).
Subsec. (i)(4)(B).
Subsec. (i)(5)(A).
Subsec. (j)(1).
Subsec. (j)(2).
Subsec. (j)(2)(A).
Subsec. (j)(2)(B)(ii).
Subsec. (j)(2)(C).
Subsec. (j)(3)(A), (B).
Subsec. (j)(4)(A).
Subsec. (j)(4)(A)(i).
Subsec. (j)(4)(B).
Subsec. (j)(4)(D).
1997—Subsec. (b)(7).
Subsec. (c)(3).
Subsec. (d)(2)(C).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Effective Date of 2017 Amendment
Amendment by section 11002(d)(1)(T) of
Amendment by section 11051(b)(3)(D) of
Effective Date of 2010 Amendment
Effective Date of 2004 Amendment
Amendment by section 207(19) of
Effective Date of 2003 Amendment
Amendment by
Effective Date of 2002 Amendment
Effective Date of 2000 Amendment
Effective Date of 1997 Amendments
Amendment by
Amendment by
Effective Date
Section applicable to taxable years beginning after Dec. 31, 1996, see section 301(j) of
Time for Filing Reports, Etc.
"(1) The report required by section 220(j)(4) of the Internal Revenue Code of 1986 to be made on August 1, 2005, or August 1, 2006, as the case may be, shall be treated as timely if made before the close of the 90-day period beginning on the date of the enactment of this Act [Dec. 20, 2006].
"(2) The determination and publication required by section 220(j)(5) of such Code with respect to calendar year 2005 or calendar year 2006, as the case may be, shall be treated as timely if made before the close of the 120-day period beginning on the date of the enactment of this Act. If the determination under the preceding sentence is that 2005 or 2006 is a cut-off year under section 220(i) of such Code, the cut-off date under such section 220(i) shall be the last day of such 120-day period."
"(1) The report required by section 220(j)(4) of the Internal Revenue Code of 1986 to be made on August 1, 2004, shall be treated as timely if made before the close of the 90-day period beginning on the date of the enactment of this Act [Oct. 4, 2004].
"(2) The determination and publication required by section 220(j)(5) of such Code with respect to calendar year 2004 shall be treated as timely if made before the close of the 120-day period beginning on the date of the enactment of this Act. If the determination under the preceding sentence is that 2004 is a cut-off year under section 220(i) of such Code, the cut-off date under such section 220(i) shall be the last day of such 120-day period."
Monitoring of Participation in Medical Savings Accounts
"(1) during 1997, 1998, 1999, and 2000, regularly evaluate the number of individuals who are maintaining medical savings accounts and the reduction in revenues to the United States by reason of such accounts, and
"(2) provide such reports of such evaluations to Congress as such Secretary determines appropriate."
Study of Effects of Medical Savings Accounts on Small Group Market
§221. Interest on education loans
(a) Allowance of deduction
In the case of an individual, there shall be allowed as a deduction for the taxable year an amount equal to the interest paid by the taxpayer during the taxable year on any qualified education loan.
(b) Maximum deduction
(1) In general
Except as provided in paragraph (2), the deduction allowed by subsection (a) for the taxable year shall not exceed $2,500.
(2) Limitation based on modified adjusted gross income
(A) In general
The amount which would (but for this paragraph) be allowable as a deduction under this section shall be reduced (but not below zero) by the amount determined under subparagraph (B).
(B) Amount of reduction
The amount determined under this subparagraph is the amount which bears the same ratio to the amount which would be so taken into account as—
(i) the excess of—
(I) the taxpayer's modified adjusted gross income for such taxable year, over
(II) $50,000 ($100,000 in the case of a joint return), bears to
(ii) $15,000 ($30,000 in the case of a joint return).
(C) Modified adjusted gross income
The term "modified adjusted gross income" means adjusted gross income determined—
(i) without regard to this section and sections 85(c) 1 911, 931, and 933, and
(ii) after application of sections 86, 135, 137, 219, and 469.
(c) Dependents not eligible for deduction
No deduction shall be allowed by this section to an individual for the taxable year if a deduction under section 151 with respect to such individual is allowed to another taxpayer for the taxable year beginning in the calendar year in which such individual's taxable year begins.
(d) Definitions
For purposes of this section—
(1) Qualified education loan
The term "qualified education loan" means any indebtedness incurred by the taxpayer solely to pay qualified higher education expenses—
(A) which are incurred on behalf of the taxpayer, the taxpayer's spouse, or any dependent of the taxpayer as of the time the indebtedness was incurred,
(B) which are paid or incurred within a reasonable period of time before or after the indebtedness is incurred, and
(C) which are attributable to education furnished during a period during which the recipient was an eligible student.
Such term includes indebtedness used to refinance indebtedness which qualifies as a qualified education loan. The term "qualified education loan" shall not include any indebtedness owed to a person who is related (within the meaning of section 267(b) or 707(b)(1)) to the taxpayer or to any person by reason of a loan under any qualified employer plan (as defined in section 72(p)(4)) or under any contract referred to in section 72(p)(5).
(2) Qualified higher education expenses
The term "qualified higher education expenses" means the cost of attendance (as defined in section 472 of the Higher Education Act of 1965,
(A) the amount excluded from gross income under section 127, 135, 529, or 530 by reason of such expenses, and
(B) the amount of any scholarship, allowance, or payment described in section 25A(g)(2).
For purposes of the preceding sentence, the term "eligible educational institution" has the same meaning given such term by section 25A(f)(2), except that such term shall also include an institution conducting an internship or residency program leading to a degree or certificate awarded by an institution of higher education, a hospital, or a health care facility which offers postgraduate training.
(3) Eligible student
The term "eligible student" has the meaning given such term by section 25A(b)(3).
(4) Dependent
The term "dependent" has the meaning given such term by section 152 (determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof).
(e) Special rules
(1) Denial of double benefit
No deduction shall be allowed under this section for any amount for which a deduction is allowable under any other provision of this chapter, or for which an exclusion is allowable under section 127 to the taxpayer by reason of the payment by the taxpayer's employer of any indebtedness on a qualified education loan of the taxpayer. The deduction otherwise allowable under subsection (a) (prior to the application of subsection (b)) to the taxpayer for any taxable year shall be reduced (but not below zero) by so much of the distributions treated as a qualified higher education expense under section 529(c)(9) with respect to loans of the taxpayer as would be includible in gross income under section 529(c)(3)(A) for such taxable year but for such treatment.
(2) Married couples must file joint return
If the taxpayer is married at the close of the taxable year, the deduction shall be allowed under subsection (a) only if the taxpayer and the taxpayer's spouse file a joint return for the taxable year.
(3) Marital status
Marital status shall be determined in accordance with section 7703.
(f) Inflation adjustments
(1) In general
In the case of a taxable year beginning after 2002, the $50,000 and $100,000 amounts in subsection (b)(2) shall each be increased by an amount equal to—
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting "calendar year 2001" for "calendar year 2016" in subparagraph (A)(ii) thereof.
(2) Rounding
If any amount as adjusted under paragraph (1) is not a multiple of $5,000, such amount shall be rounded to the next lowest multiple of $5,000.
(Added
Inflation Adjusted Items for Certain Years
For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under
Editorial Notes
References in Text
The date of the enactment of the Taxpayer Relief Act of 1997, referred to in subsec. (d)(2), is the date of enactment of
Prior Provisions
A prior section 221 was renumbered
Another prior section 221, added
Amendments
2021—Subsec. (b)(2)(C)(i).
2020—Subsec. (b)(2)(C)(i).
Subsec. (e)(1).
2019—Subsec. (e)(1).
2017—Subsec. (b)(2)(C)(i).
Subsec. (f)(1)(B).
2014—Subsec. (b)(1).
2005—Subsec. (d)(2).
2004—Subsec. (b)(2)(C)(i).
Subsec. (d)(4).
Subsec. (f)(1).
2001—Subsec. (b)(2)(B)(i), (ii).
"(i) the excess of—
"(I) the taxpayer's modified adjusted gross income for such taxable year, over
"(II) $40,000 ($60,000 in the case of a joint return), bears to
"(ii) $15,000."
Subsec. (b)(2)(C)(i).
Subsec. (d).
Subsec. (e).
Subsec. (e)(2)(A).
Subsec. (f).
Subsec. (f)(1).
Subsec. (g).
1998—Subsec. (b)(2)(C).
Subsec. (b)(2)(C)(i).
Subsec. (b)(2)(C)(ii).
Subsec. (d).
Subsec. (e)(1).
Statutory Notes and Related Subsidiaries
Effective Date of 2021 Amendment
Amendment by
Effective Date of 2020 Amendment
Amendment by
Amendment by
Effective Date of 2019 Amendment
Effective Date of 2017 Amendment
Amendment by section 11002(d)(1)(U) of
Amendment by section 13305(b)(1) of
Effective Date of 2014 Amendment
Amendment by
Effective Date of 2004 Amendments
Amendment by
Amendment by section 207(20) of
Effective Date of 2001 Amendment
Amendment by section 402(b)(2)(B) of
Amendment by section 431(c)(2) of
Effective Date of 1998 Amendments
Amendment by
Amendment by
Effective Date
Section applicable to any qualified education loan (as defined in subsec. (e)(1) of this section) incurred on, before, or after Aug. 5, 1997, but only with respect to any loan interest payment due and paid after Dec. 31, 1997, and to the portion of the 60-month period referred to in subsec. (d) of this section after Dec. 31, 1997, see section 202(e) of
1 So in original. Probably should be followed by a comma.
[§222. Repealed. Pub. L. 116–260, div. EE, title I, §104(b)(1), Dec. 27, 2020, 134 Stat. 3041 ]
Section, added
A prior section 222 was renumbered
Another prior section 222, added
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal of section applicable to taxable years beginning after Dec. 31, 2020, see section 104(c) of div. EE of
§223. Health savings accounts
(a) Deduction allowed
In the case of an individual who is an eligible individual for any month during the taxable year, there shall be allowed as a deduction for the taxable year an amount equal to the aggregate amount paid in cash during such taxable year by or on behalf of such individual to a health savings account of such individual.
(b) Limitations
(1) In general
The amount allowable as a deduction under subsection (a) to an individual for the taxable year shall not exceed the sum of the monthly limitations for months during such taxable year that the individual is an eligible individual.
(2) Monthly limitation
The monthly limitation for any month is 1/12 of—
(A) in the case of an eligible individual who has self-only coverage under a high deductible health plan as of the first day of such month, $2,250.
(B) in the case of an eligible individual who has family coverage under a high deductible health plan as of the first day of such month, $4,500.
(3) Additional contributions for individuals 55 or older
(A) In general
In the case of an individual who has attained age 55 before the close of the taxable year, the applicable limitation under subparagraphs (A) and (B) of paragraph (2) shall be increased by the additional contribution amount.
(B) Additional contribution amount
For purposes of this section, the additional contribution amount is the amount determined in accordance with the following table:
| For taxable years beginning in: | The additional contribution amount is: |
|---|---|
| 2004 | $500 |
| 2005 | $600 |
| 2006 | $700 |
| 2007 | $800 |
| 2008 | $900 |
| 2009 and thereafter | $1,000. |
(4) Coordination with other contributions
The limitation which would (but for this paragraph) apply under this subsection to an individual for any taxable year shall be reduced (but not below zero) by the sum of—
(A) the aggregate amount paid for such taxable year to Archer MSAs of such individual,
(B) the aggregate amount contributed to health savings accounts of such individual which is excludable from the taxpayer's gross income for such taxable year under section 106(d) (and such amount shall not be allowed as a deduction under subsection (a)), and
(C) the aggregate amount contributed to health savings accounts of such individual for such taxable year under section 408(d)(9) (and such amount shall not be allowed as a deduction under subsection (a)).
Subparagraph (A) shall not apply with respect to any individual to whom paragraph (5) applies.
(5) Special rule for married individuals
In the case of individuals who are married to each other, if either spouse has family coverage—
(A) both spouses shall be treated as having only such family coverage (and if such spouses each have family coverage under different plans, as having the family coverage with the lowest annual deductible), and
(B) the limitation under paragraph (1) (after the application of subparagraph (A) and without regard to any additional contribution amount under paragraph (3))—
(i) shall be reduced by the aggregate amount paid to Archer MSAs of such spouses for the taxable year, and
(ii) after such reduction, shall be divided equally between them unless they agree on a different division.
(6) Denial of deduction to dependents
No deduction shall be allowed under this section to any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual's taxable year begins.
(7) Medicare eligible individuals
The limitation under this subsection for any month with respect to an individual shall be zero for the first month such individual is entitled to benefits under title XVIII of the Social Security Act and for each month thereafter.
(8) Increase in limit for individuals becoming eligible individuals after the beginning of the year
(A) In general
For purposes of computing the limitation under paragraph (1) for any taxable year, an individual who is an eligible individual during the last month of such taxable year shall be treated—
(i) as having been an eligible individual during each of the months in such taxable year, and
(ii) as having been enrolled, during each of the months such individual is treated as an eligible individual solely by reason of clause (i), in the same high deductible health plan in which the individual was enrolled for the last month of such taxable year.
(B) Failure to maintain high deductible health plan coverage
(i) In general
If, at any time during the testing period, the individual is not an eligible individual, then—
(I) gross income of the individual for the taxable year in which occurs the first month in the testing period for which such individual is not an eligible individual is increased by the aggregate amount of all contributions to the health savings account of the individual which could not have been made but for subparagraph (A), and
(II) the tax imposed by this chapter for any taxable year on the individual shall be increased by 10 percent of the amount of such increase.
(ii) Exception for disability or death
Subclauses (I) and (II) of clause (i) shall not apply if the individual ceased to be an eligible individual by reason of the death of the individual or the individual becoming disabled (within the meaning of section 72(m)(7)).
(iii) Testing period
The term "testing period" means the period beginning with the last month of the taxable year referred to in subparagraph (A) and ending on the last day of the 12th month following such month.
(c) Definitions and special rules
For purposes of this section—
(1) Eligible individual
(A) In general
The term "eligible individual" means, with respect to any month, any individual if—
(i) such individual is covered under a high deductible health plan as of the 1st day of such month, and
(ii) such individual is not, while covered under a high deductible health plan, covered under any health plan—
(I) which is not a high deductible health plan, and
(II) which provides coverage for any benefit which is covered under the high deductible health plan.
(B) Certain coverage disregarded
Subparagraph (A)(ii) shall be applied without regard to—
(i) coverage for any benefit provided by permitted insurance,
(ii) coverage (whether through insurance or otherwise) for accidents, disability, dental care, vision care, long-term care, or (in the case of months or plan years to which paragraph (2)(E) applies) telehealth and other remote care, and
(iii) for taxable years beginning after December 31, 2006, coverage under a health flexible spending arrangement during any period immediately following the end of a plan year of such arrangement during which unused benefits or contributions remaining at the end of such plan year may be paid or reimbursed to plan participants for qualified benefit expenses incurred during such period if—
(I) the balance in such arrangement at the end of such plan year is zero, or
(II) the individual is making a qualified HSA distribution (as defined in section 106(e)) in an amount equal to the remaining balance in such arrangement as of the end of such plan year, in accordance with rules prescribed by the Secretary.
(C) Special rule for individuals eligible for certain veterans benefits
An individual shall not fail to be treated as an eligible individual for any period merely because the individual receives hospital care or medical services under any law administered by the Secretary of Veterans Affairs for a service-connected disability (within the meaning of
(D) Special rule for individuals receiving benefits subject to surprise billing statutes
An individual shall not fail to be treated as an eligible individual for any period merely because the individual receives benefits for medical care subject to and in accordance with section 9816 or 9817, section 2799A–1 or 2799A–2 of the Public Health Service Act, or section 716 or 717 of the Employee Retirement Income Security Act of 1974, or any State law providing similar protections to such individual.
(2) High deductible health plan
(A) In general
The term "high deductible health plan" means a health plan—
(i) which has an annual deductible which is not less than—
(I) $1,000 for self-only coverage, and
(II) twice the dollar amount in subclause (I) for family coverage, and
(ii) the sum of the annual deductible and the other annual out-of-pocket expenses required to be paid under the plan (other than for premiums) for covered benefits does not exceed—
(I) $5,000 for self-only coverage, and
(II) twice the dollar amount in subclause (I) for family coverage.
(B) Exclusion of certain plans
Such term does not include a health plan if substantially all of its coverage is coverage described in paragraph (1)(B).
(C) Safe harbor for absence of preventive care deductible
A plan shall not fail to be treated as a high deductible health plan by reason of failing to have a deductible for preventive care (within the meaning of section 1861 of the Social Security Act, except as otherwise provided by the Secretary).
(D) Special rules for network plans
In the case of a plan using a network of providers—
(i) Annual out-of-pocket limitation
Such plan shall not fail to be treated as a high deductible health plan by reason of having an out-of-pocket limitation for services provided outside of such network which exceeds the applicable limitation under subparagraph (A)(ii).
(ii) Annual deductible
Such plan's annual deductible for services provided outside of such network shall not be taken into account for purposes of subsection (b)(2).
(E) Safe harbor for absence of deductible for telehealth
In the case of—
(i) months beginning after March 31, 2022, and before January 1, 2023, and
(ii) plan years beginning on or before December 31, 2021, or after December 31, 2022, and before January 1, 2025,
a plan shall not fail to be treated as a high deductible health plan by reason of failing to have a deductible for telehealth and other remote care services.
(F) Special rule for surprise billing
A plan shall not fail to be treated as a high deductible health plan by reason of providing benefits for medical care in accordance with section 9816 or 9817, section 2799A–1 or 2799A–2 of the Public Health Service Act, or section 716 or 717 of the Employee Retirement Income Security Act of 1974, or any State law providing similar protections to individuals, prior to the satisfaction of the deductible under paragraph (2)(A)(i).
(G) Safe harbor for absence of deductible for certain insulin products
(i) In general
A plan shall not fail to be treated as a high deductible health plan by reason of failing to have a deductible for selected insulin products.
(ii) Selected insulin products
For purposes of this subparagraph—
(I) In general
The term "selected insulin products" means any dosage form (such as vial, pump, or inhaler dosage forms) of any different type (such as rapid-acting, short-acting, intermediate-acting, long-acting, ultra long-acting, and premixed) of insulin.
(II) Insulin
The term "insulin" means insulin that is licensed under subsection (a) or (k) of section 351 of the Public Health Service Act (
(3) Permitted insurance
The term "permitted insurance" means—
(A) insurance if substantially all of the coverage provided under such insurance relates to—
(i) liabilities incurred under workers' compensation laws,
(ii) tort liabilities,
(iii) liabilities relating to ownership or use of property, or
(iv) such other similar liabilities as the Secretary may specify by regulations,
(B) insurance for a specified disease or illness, and
(C) insurance paying a fixed amount per day (or other period) of hospitalization.
(4) Family coverage
The term "family coverage" means any coverage other than self-only coverage.
(5) Archer MSA
The term "Archer MSA" has the meaning given such term in section 220(d).
(d) Health savings account
For purposes of this section—
(1) In general
The term "health savings account" means a trust created or organized in the United States as a health savings account exclusively for the purpose of paying the qualified medical expenses of the account beneficiary, but only if the written governing instrument creating the trust meets the following requirements:
(A) Except in the case of a rollover contribution described in subsection (f)(5) or section 220(f)(5), no contribution will be accepted—
(i) unless it is in cash, or
(ii) to the extent such contribution, when added to previous contributions to the trust for the calendar year, exceeds the sum of—
(I) the dollar amount in effect under subsection (b)(2)(B), and
(II) the dollar amount in effect under subsection (b)(3)(B).
(B) The trustee is a bank (as defined in section 408(n)), an insurance company (as defined in section 816), or another person who demonstrates to the satisfaction of the Secretary that the manner in which such person will administer the trust will be consistent with the requirements of this section.
(C) No part of the trust assets will be invested in life insurance contracts.
(D) The assets of the trust will not be commingled with other property except in a common trust fund or common investment fund.
(E) The interest of an individual in the balance in his account is nonforfeitable.
(2) Qualified medical expenses
(A) In general
The term "qualified medical expenses" means, with respect to an account beneficiary, amounts paid by such beneficiary for medical care (as defined in section 213(d)) for such individual, the spouse of such individual, and any dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof) of such individual, but only to the extent such amounts are not compensated for by insurance or otherwise. For purposes of this subparagraph, amounts paid for menstrual care products shall be treated as paid for medical care.
(B) Health insurance may not be purchased from account
Subparagraph (A) shall not apply to any payment for insurance.
(C) Exceptions
Subparagraph (B) shall not apply to any expense for coverage under—
(i) a health plan during any period of continuation coverage required under any Federal law,
(ii) a qualified long-term care insurance contract (as defined in section 7702B(b)),
(iii) a health plan during a period in which the individual is receiving unemployment compensation under any Federal or State law, or
(iv) in the case of an account beneficiary who has attained the age specified in section 1811 of the Social Security Act, any health insurance other than a medicare supplemental policy (as defined in section 1882 of the Social Security Act).
(D) Menstrual care product
For purposes of this paragraph, the term "menstrual care product" means a tampon, pad, liner, cup, sponge, or similar product used by individuals with respect to menstruation or other genital-tract secretions.
(3) Account beneficiary
The term "account beneficiary" means the individual on whose behalf the health savings account was established.
(4) Certain rules to apply
Rules similar to the following rules shall apply for purposes of this section:
(A) Section 219(d)(2) (relating to no deduction for rollovers).
(B) Section 219(f)(3) (relating to time when contributions deemed made).
(C) Except as provided in section 106(d), section 219(f)(5) (relating to employer payments).
(D) Section 408(g) (relating to community property laws).
(E) Section 408(h) (relating to custodial accounts).
(e) Tax treatment of accounts
(1) In general
A health savings account is exempt from taxation under this subtitle unless such account has ceased to be a health savings account. Notwithstanding the preceding sentence, any such account is subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable, etc. organizations).
(2) Account terminations
Rules similar to the rules of paragraphs (2) and (4) of section 408(e) shall apply to health savings accounts, and any amount treated as distributed under such rules shall be treated as not used to pay qualified medical expenses.
(f) Tax treatment of distributions
(1) Amounts used for qualified medical expenses
Any amount paid or distributed out of a health savings account which is used exclusively to pay qualified medical expenses of any account beneficiary shall not be includible in gross income.
(2) Inclusion of amounts not used for qualified medical expenses
Any amount paid or distributed out of a health savings account which is not used exclusively to pay the qualified medical expenses of the account beneficiary shall be included in the gross income of such beneficiary.
(3) Excess contributions returned before due date of return
(A) In general
If any excess contribution is contributed for a taxable year to any health savings account of an individual, paragraph (2) shall not apply to distributions from the health savings accounts of such individual (to the extent such distributions do not exceed the aggregate excess contributions to all such accounts of such individual for such year) if—
(i) such distribution is received by the individual on or before the last day prescribed by law (including extensions of time) for filing such individual's return for such taxable year, and
(ii) such distribution is accompanied by the amount of net income attributable to such excess contribution.
Any net income described in clause (ii) shall be included in the gross income of the individual for the taxable year in which it is received.
(B) Excess contribution
For purposes of subparagraph (A), the term "excess contribution" means any contribution (other than a rollover contribution described in paragraph (5) or section 220(f)(5)) which is neither excludable from gross income under section 106(d) nor deductible under this section.
(4) Additional tax on distributions not used for qualified medical expenses
(A) In general
The tax imposed by this chapter on the account beneficiary for any taxable year in which there is a payment or distribution from a health savings account of such beneficiary which is includible in gross income under paragraph (2) shall be increased by 20 percent of the amount which is so includible.
(B) Exception for disability or death
Subparagraph (A) shall not apply if the payment or distribution is made after the account beneficiary becomes disabled within the meaning of section 72(m)(7) or dies.
(C) Exception for distributions after medicare eligibility
Subparagraph (A) shall not apply to any payment or distribution after the date on which the account beneficiary attains the age specified in section 1811 of the Social Security Act.
(5) Rollover contribution
An amount is described in this paragraph as a rollover contribution if it meets the requirements of subparagraphs (A) and (B).
(A) In general
Paragraph (2) shall not apply to any amount paid or distributed from a health savings account to the account beneficiary to the extent the amount received is paid into a health savings account for the benefit of such beneficiary not later than the 60th day after the day on which the beneficiary receives the payment or distribution.
(B) Limitation
This paragraph shall not apply to any amount described in subparagraph (A) received by an individual from a health savings account if, at any time during the 1-year period ending on the day of such receipt, such individual received any other amount described in subparagraph (A) from a health savings account which was not includible in the individual's gross income because of the application of this paragraph.
(6) Coordination with medical expense deduction
For purposes of determining the amount of the deduction under section 213, any payment or distribution out of a health savings account for qualified medical expenses shall not be treated as an expense paid for medical care.
(7) Transfer of account incident to divorce
The transfer of an individual's interest in a health savings account to an individual's spouse or former spouse under a divorce or separation instrument described in clause (i) of section 121(d)(3)(C) shall not be considered a taxable transfer made by such individual notwithstanding any other provision of this subtitle, and such interest shall, after such transfer, be treated as a health savings account with respect to which such spouse is the account beneficiary.
(8) Treatment after death of account beneficiary
(A) Treatment if designated beneficiary is spouse
If the account beneficiary's surviving spouse acquires such beneficiary's interest in a health savings account by reason of being the designated beneficiary of such account at the death of the account beneficiary, such health savings account shall be treated as if the spouse were the account beneficiary.
(B) Other cases
(i) In general
If, by reason of the death of the account beneficiary, any person acquires the account beneficiary's interest in a health savings account in a case to which subparagraph (A) does not apply—
(I) such account shall cease to be a health savings account as of the date of death, and
(II) an amount equal to the fair market value of the assets in such account on such date shall be includible if such person is not the estate of such beneficiary, in such person's gross income for the taxable year which includes such date, or if such person is the estate of such beneficiary, in such beneficiary's gross income for the last taxable year of such beneficiary.
(ii) Special rules
(I) Reduction of inclusion for predeath expenses
The amount includible in gross income under clause (i) by any person (other than the estate) shall be reduced by the amount of qualified medical expenses which were incurred by the decedent before the date of the decedent's death and paid by such person within 1 year after such date.
(II) Deduction for estate taxes
An appropriate deduction shall be allowed under section 691(c) to any person (other than the decedent or the decedent's spouse) with respect to amounts included in gross income under clause (i) by such person.
(g) Cost-of-living adjustment
(1) In general
Each dollar amount in subsections (b)(2) and (c)(2)(A) shall be increased by an amount equal to—
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which such taxable year begins determined by substituting for "calendar year 2016" in subparagraph (A)(ii) thereof—
(i) except as provided in clause (ii), "calendar year 1997", and
(ii) in the case of each dollar amount in subsection (c)(2)(A), "calendar year 2003".
In the case of adjustments made for any taxable year beginning after 2007, section 1(f)(4) shall be applied for purposes of this paragraph by substituting "March 31" for "August 31", and the Secretary shall publish the adjusted amounts under subsections (b)(2) and (c)(2)(A) for taxable years beginning in any calendar year no later than June 1 of the preceding calendar year.
(2) Rounding
If any increase under paragraph (1) is not a multiple of $50, such increase shall be rounded to the nearest multiple of $50.
(h) Reports
The Secretary may require—
(1) the trustee of a health savings account to make such reports regarding such account to the Secretary and to the account beneficiary with respect to contributions, distributions, the return of excess contributions, and such other matters as the Secretary determines appropriate, and
(2) any person who provides an individual with a high deductible health plan to make such reports to the Secretary and to the account beneficiary with respect to such plan as the Secretary determines appropriate.
The reports required by this subsection shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required by the Secretary.
(Added
Inflation Adjusted Items for Certain Years
For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table below and under
Editorial Notes
References in Text
The Social Security Act, referred to in subsecs. (b)(7), (c)(2)(C), (d)(2)(C)(iv), (f)(4)(C), is act Aug. 14, 1935, ch. 531,
Sections 2799A–1 and 2799A–2 of the Public Health Service Act, referred to in subsec. (c)(1)(D), (2)(F), are classified to sections 300gg–111 and 300gg–112, respectively, of Title 42, The Public Health and Welfare.
Sections 716 and 717 of the Employee Retirement Income Security Act of 1974, referred to in subsec. (c)(1)(D), (2)(F), are classified to sections 1185e and 1185f, respectively, of Title 29, Labor.
Section 7002(e)(4) of the Biologics Price Competition and Innovation Act of 2009, referred to in subsec. (c)(2)(G)(ii)(II), is section 7002(e)(4) of
Prior Provisions
A prior section 223 was renumbered
Amendments
2022—Subsec. (c)(1)(B)(ii).
Subsec. (c)(2)(E).
Subsec. (c)(2)(G).
2020—Subsec. (c)(1)(B)(ii).
Subsec. (c)(1)(D).
Subsec. (c)(2)(E).
Subsec. (c)(2)(F).
Subsec. (d)(2)(A).
Subsec. (d)(2)(D).
2018—Subsec. (c)(2)(C).
Subsec. (d)(2)(A).
2017—Subsec. (f)(7).
Subsec. (g)(1)(B).
2015—Subsec. (c)(1)(C).
2010—Subsec. (d)(2)(A).
Subsec. (f)(4)(A).
2006—Subsec. (b)(2)(A).
"(i) the annual deductible under such coverage, or
"(ii) $2,250, or".
Subsec. (b)(2)(B).
"(i) the annual deductible under such coverage, or
"(ii) $4,500."
Subsec. (b)(4)(C).
Subsec. (b)(8).
Subsec. (c)(1)(B)(iii).
Subsec. (d)(1)(A)(ii)(I).
Subsec. (g)(1).
2005—Subsec. (d)(2)(A).
Statutory Notes and Related Subsidiaries
Effective Date of 2022 Amendment
Effective Date of 2020 Amendment
Amendment by section 3702(a) of
Effective Date of 2017 Amendment
Amendment by section 11002(d)(1)(V) of
Amendment by section 11051(b)(3)(E) of
Effective Date of 2015 Amendment
Effective Date of 2010 Amendment
Amendment by section 9003(a) of
Amendment by section 9004(a) of
Effective Date of 2006 Amendment
Effective Date of 2005 Amendment
Amendment by
Effective Date
Section applicable to taxable years beginning after Dec. 31, 2003, see section 1201(k) of
Inflation Adjusted Items for Certain Years
Provisions relating to inflation adjustment of items in this section for certain years were contained in the following:
2023—Revenue Procedure 2022–24.
2022—Revenue Procedure 2021–25.
2021—Revenue Procedure 2020–32.
2020—Revenue Procedure 2019–25.
2019—Revenue Procedure 2018–30.
2018—Revenue Procedure 2017–37.
2017—Revenue Procedure 2016–28.
2016—Revenue Procedure 2015–30.
2015—Revenue Procedure 2014–30.
2014—Revenue Procedure 2013–25.
2013—Revenue Procedure 2012–26.
2012—Revenue Procedure 2011–32.
2011—Revenue Procedure 2010–22.
2010—Revenue Procedure 2009–29.
2009—Revenue Procedure 2008–29.
2008—Revenue Procedure 2007–36.
§224. Cross reference
For deductions in respect of a decedent, see section 691.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
2003—
2001—
1997—
1996—
1990—
1986—
1981—
1976—
1974—
1971—
1964—
Statutory Notes and Related Subsidiaries
Effective Date of 2003 Amendment
Amendment by
Effective Date of 2001 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by section 301(b)(5)(A) of
Savings Provision
For provisions that nothing in amendment by section 11802(e)(2) of