HSA tax documents

HSA holders must attach Form 8889 to their Forms 1040, 1040-SR, or 1040-NR to report tax-related events affecting their HSAs, including contributions and distributions. Distributions from an HSA used exclusively to pay qualified medical expenses of the account beneficiary, spouse, or dependents are excludable from gross income. However, any part of a distribution not used to pay qualified medical expenses is includible in gross income and is subject to an additional 20% tax unless an exception applies. You need to file IRS form 8889 with your income taxes to report contributions and distributions from your health savings account . Use your 1099-SA form for the distribution activity and your December bank statement for contributions.

• Federal and state laws and regulations are subject to change.
• They know these IRS forms inside and out and can help guide you to the right answer.
• The student will be required to return all course materials.
• Check your plan document and summary plan description or contact your benefits department for specific coverage details.
• You must include certain amounts in income because you failed to be an eligible individual during the testing period.

The 2021 limits and thresholds for HSAs and HDHPs are also provided . In addition, the publication summarizes the temporary COVID-19-related relief for health FSAs available under 2020 legislation and agency guidance. If you have a Health Savings Account , you might be a bit confused come tax season. You’re probably already aware that a tax-sheltered HSA offers incredible financial benefits, but figuring out how to get the most out of your tax savings can become a little fuzzy. To ensure your contributions are tax exempt, you must file Form 8889. Doing so also prevents you from paying penalties and enables you to claim certain deductions.

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For all other code descriptions, please contact a tax professional. If you’re 65 or older or enrolled in Medicare, you can use your HSA for nonmedical expenses without incurring a tax penalty. Those distributions will be treated like retirement income and will be subject to normal income tax. It’s up to you to maintain records to verify that funds were used for qualified medical expenses.

Employer Contributions and Contributions from Your Paycheck

If, on the first day of the last month of your tax year , you had family coverage, check the “family” box. You can make deductible contributions to your HSA even if your employer made contributions. However, if you made contributions in addition to any employer contributions and qualified HSA funding distributions, you may have to pay an additional tax. Enter your name as shown on your tax return and the SSN of the HSA account beneficiary. If married filing jointly and both you and your spouse have HSAs, complete a separate Form 8889 for each of you.

Enter “statement” at the top of each Form 8889 and complete the form as instructed. Next, complete a controlling Form 8889, combining the amounts shown on each of the statement Forms 8889. Attach the statements to your paper tax return after the controlling Form 8889.

Contributing to Your Health Savings Account is easy.

Line 3 can be quite complicated, but in essence you need to list your contribution limit for the year. If you had self-only or family coverage all year, the amounts are provided for you. Otherwise, you need to prorate your coverage by month. In this case, we had family coverage for 6 months, so our contribution limit is $3,550 for 2020. Line 4 asks about Archer MSA’s and Line 5 is a simple subtraction. On Line 13, you show your total excess contributions and you’ll need to use Tax Form 5329 to figure out the additional taxes for which you’re responsible.

Some states do not allow deductions for HSA contributions, and some states tax earnings and capital gains on HSA balances over a certain annual amount. If you can’t file your federal tax return by the deadline, you can request an automatic six-month extension. However, you will need to file IRS Form 4868before the tax-filing deadline. ttps://turbo-tax.org/ Keep in mind that if you owe taxes, you should go ahead and pay them by the deadline, or interest will be added to the unpaid tax amount until you file and pay your tax bill. In this example, if you chose to withdraw more than $12,000 (to cover non-medical expenses), you would owe taxes on the additional funds plus a 20% penalty tax.

Health Savings Account (HSA)

IRS form 5498-SA shows the amount of money deposited into your HSA for the tax year. IRS form 1099-SA shows the amount of money you spent from your HSA during the tax year. Sign in to your account and click on Statement & Tax Docs in the 8889-t tax form I want to section to view or download your statement. If you have made your contributions within the allotted time period , you will have been issued a corrected 5498-SA. As of April 18, 2023, you are unable to make contributions.