Do You Have Clients in a Federally Declared Disaster Area? Here’s How to Navigate Form 5498 Reporting and Late IRA/HSA Contributions

By Jodie Norquist, CIP, CHSP

The 2022 federal tax return deadline has passed, and you and your team may be taking a collective deep breath before preparing for your next IRS deadline.

But—wait a minute—is the 2022 tax season truly over for your clients? If they live or work in a federally declared disaster zone, their federal tax deadline has been postponed this year. In California, for example, IRA or health savings account (HSA) owners living or owning businesses in certain counties can make 2022 IRA or HSA contributions until October 16, 2023.

The IRS offers a list of the most recent tax relief provisions online in Tax Relief in Disaster Situations, located in its Newsroom. The information details who the affected taxpayers are, the scope of the relief, and any special reporting instructions.

Listed below are the most recent federally declared disaster areas and their postponed tax return deadlines, which includes deadlines to make 2022 IRA/HSA contributions. Click on the state link to learn which taxpayers in specific counties are affected by this disaster tax relief.

Postponed 2022 Tax Deadlines for Federally Declared Disaster Areas

Reporting Late IRA/HSA Contributions

While the IRS has extended the deadline for many taxpayers across several states to make IRA and HSA contributions, the agency has not, as of this writing, postponed the deadline for financial organizations to provide the 2022 Form 5498, IRA Contribution Information, to account owners and to the IRS. So how do you report these late contributions if the 2022 Form 5498 must be mailed by May 31?

The IRS does not require financial organizations to correct or amend Form 5498 for account owners who make late contributions because of disaster postponements. Instead, according to the 2023 Instructions for Forms 1099-R and 5498, these postponed IRA contributions should be reported in Boxes 13a, 13b, and 13c on the 2023 Form 5498.

On Form 5498, report the following:

Box 13a., Postponed/late contrib. — the amount of the postponed contribution made in 2023 for a prior year
Box 13b., Year — Enter the year for which the postponed contribution was made
Box 13c., Code — Enter “FD,” which stands for “federally declared disaster area,” the reason the IRA owner made the postponed contribution

If an IRA owner makes contributions for more than one prior tax year, each prior-year contribution must be reported on its own separate Form 5498.

There is no official IRS guidance on how to report late HSA contributions. But because prior-year HSA contributions are reported twice: the first year in Box 3 and the following year in Box 2 of Form 5498-SA, financial organizations should issue a corrected 2022 Form 5498 and enter the late contribution amount in Box 3, Total contributions made in 2023 for 2022. Financial organizations should also report the late contribution on the 2023 Form 5498-SA in Box 2, Total contributions made in 2023. HSA owners report these contributions to the IRS for the 2022 tax year by filing Form 8889, Health Savings Accounts (HSAs), with their federal tax return.

Other Eligible IRA-Related Acts Affected by Federally Declared Disasters

Eligible taxpayers affected by federally declared disasters may often postpone other actions related to their IRAs. Examples of tax-related acts that may be postponed include the following.

Removing excess IRA contributions
Recharacterizing IRA contributions
Making or receiving an IRC Sec. 72(t) substantially equal periodic payment
Taking a required minimum distribution (RMD)
Making a qualified disclaimer of inherited assets
Completing rollovers

If an account owner is unsure how to report or self-certify these postponed contributions or any other tax-related acts, it’s always a good idea to refer them to a competent tax advisor for assistance.