If you received Form 1099-SA, you'll need to enter it in your tax return to report distributions from a Health Savings Account (HSA), Archer Medical Savings Account (MSA), or Medicare Advantage (MA) MSA. Even if your distribution isn't taxable, the IRS generally requires you to report it on your return.
How to Enter Form 1099-SA in the Program
Follow these steps:
- Select Federal.
- Go to Deductions and choose Select My Forms.
- Select Adjustments to Income.
- Choose one of the following:
- Health Savings Accounts (HSAs) (Form 8889), or
- MA MSAs, Archer MSAs, and Long-Term Care Insurance Contracts (Form 8853).
Enter the information from your Form 1099-SA into the appropriate section based on the type of account you have.
What is a Form 8889 or Form 8853?
Form 8889 is used to report:
- HSA contributions
- HSA distributions
- HSA rollovers
- Any taxable HSA amounts or penalties
If your Form 1099-SA reports a distribution from an HSA, you'll generally enter that information on Form 8889.
Form 8853 is used to report:
- Archer MSA distributions
- Medicare Advantage MSA distributions
- Certain long-term care insurance information
If your Form 1099-SA reports a distribution from an Archer MSA or MA MSA, you'll generally use Form 8853.
You'll file Form 8889 or Form 8853 along with your Form 1040 or Form 1040-SR. The IRS requires these forms even when the distribution isn't taxable.
Are HSA or Archer MSA Distributions Taxable?
In many cases, distributions are not taxable.
Generally, an HSA or Archer MSA distribution remains tax-free when:
- The money was used to pay qualified medical expenses for the account holder or an eligible family member.
- The funds were rolled over to another eligible account within the required time limits.
For rollovers:
- An HSA can be rolled over into another HSA.
- An Archer MSA can be rolled over into another Archer MSA or into an HSA.
For an MA MSA, distributions are generally tax-free only when used for the account holder's qualified medical expenses.
When Could a Distribution Become Taxable?
You may need to include part or all of the distribution in income if:
- The funds were not used for qualified medical expenses.
- A rollover was not completed properly or within the required timeframe.
- The distribution doesn't qualify for another IRS exception.
In addition to income tax, an extra tax or penalty may apply depending on your situation.
What If I Received a Mistaken HSA Distribution?
The IRS allows certain mistaken HSA distributions to be repaid if the HSA trustee or custodian permits the repayment.
Generally, a mistaken distribution may be repaid by the tax filing deadline (including extensions, when applicable) for the year in which you discovered, or reasonably should have discovered, the mistake. Be sure to keep documentation supporting the correction.
To view a sample Form 1099-SA, click here