1. Hamid's employer provides a high-deductible health plan ($1,200 deductible) and contributes $500 to each employee's Health Savings Account (HSA). Hamid makes the maximum allowable contribution to his HSA. During the year, he spends $300 on qualified medical expenses and the HSA earns $18. What is the effect of Hamid's participation in the HSA on his adjusted gross income?

2. Tia is married and is employed by Carrera Auto Parts. In 2010, Carrera established high-deductible health insurance for all its employees. The plan has a $2,400 deductible for married taxpayers. Carrera also contributes 5% of each employee's salary to a Health Sav- ings Account. Tia's salary is $30,000 in 2010 and $32,000 in 2011. Tia makes the maxi- mum allowable contribution to her HSA in 2010 and 2011. She received $600 from the HSA for her 2010 medical expenses. In 2011, she spends $1,400 on medical expenses from her HSA. The MSA earns $28 in 2010 and $46 in 2011. What is the effect of the HSA trans- actions on Tia's adjusted gross income? How much does Tia have in her HSA account at the end of 2011?