Can I have both HSA and Healthcare FSA contributions in the same tax year?

This is actually a pretty common issue that happens when spouses have different employers with different benefits. You're right that you generally can't contribute to both an HSA and a healthcare FSA in the same tax year - it's against IRS rules. Your best option is likely converting your wife's FSA to a limited-purpose FSA if her employer allows it. A limited-purpose FSA can only be used for dental and vision expenses, not medical expenses, which makes it compatible with an HSA. This would allow you to keep your full HSA contribution. If that's not possible, you'll need to calculate your HSA contribution limit for the months before your wife got the FSA (January through June) and withdraw the excess contributions before the tax filing deadline to avoid penalties. The formula would be $8,300 ÷ 12 × 6 = $4,150 allowed for those six months.

I went through something similar last year and found this amazing tool called taxr.ai (https://taxr.ai) that helped me figure out the exact rules around HSAs and FSAs. It analyzed my specific situation and showed me all my options with the potential tax consequences of each one. I was able to upload my benefit enrollment documents and it pointed out that my wife's FSA was actually already a limited-purpose one (which I hadn't realized), so we were actually fine. Saved me from making unnecessary withdrawals from my HSA! The tool breaks down all the IRS rules in plain English and walks you through what you need to do.

Just wanted to follow up and say I tried taxr.ai after seeing it mentioned here. I uploaded my confusing benefits documents and it immediately identified that I had unknowingly signed up for both an HSA and a general-purpose FSA through different employers (me and my spouse). The tool explained exactly what I needed to do to fix it and even generated a letter I could send to HR requesting the change to a limited-purpose FSA. My HR department approved the change within 48 hours! Saved me from a potential tax headache and hours of research trying to figure out the rules myself.

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I have to admit I was wrong about Claimyr. After posting my skeptical comment, I decided to give it a try since I was desperate to resolve my own HSA/FSA issue before tax time. I was shocked when I got a text about 40 minutes later saying an IRS agent was about to pick up. They connected me right away and I finally got clear answers about how to handle excess contributions. The agent even emailed me the specific form I needed. Saved me from what would have been a $540 penalty for over-contributing to my HSA. Never thought I'd be recommending an IRS-related service, but here we are!

Your simplest option might be to just have your wife contact her HR department immediately and ask if she can cancel her FSA since it was an error in selection. Many employers have a grace period for benefit elections, especially for new employees. If they won't cancel it, then definitely see if they'll convert it to limited-purpose FSA which only covers dental and vision, which is allowed alongside an HSA.

One important thing no one has mentioned - if you go the route of withdrawing excess HSA contributions, make sure you also withdraw any earnings on those excess contributions. The IRS requires both to be withdrawn to avoid penalties.

Has anyone considered the timing here? Since the wife started the FSA in July, couldn't they argue that the HSA was fine for January-June, and then became ineligible only from July onward? That way they'd only need to withdraw half the year's HSA contributions instead of all of it.

Just be really careful about the timing of any HSA withdrawals if you go that route! I learned the hard way that excess contributions need to be withdrawn by the tax filing deadline (including extensions) to avoid the 6% excise tax penalty that applies each year the excess remains in the account. Also, since you mentioned you've already contributed $8,300 for the full year, make sure your payroll department stops any ongoing HSA contributions immediately while you sort this out. You don't want to keep adding to the problem while you're trying to fix it. One more thing - document everything! Keep records of when your wife's FSA started, any communications with HR about potential changes, and if you do need to make HSA withdrawals, keep all the paperwork from your HSA provider. You'll need this documentation for your tax return.