How to Use Your HSA Tax Form for Filing

A Health Savings Account (HSA) provides a tax-advantaged way to pay for medical costs, but using one comes with annual tax reporting duties. Paired with a high-deductible health plan, an HSA allows you to set aside money for qualified medical expenses without paying federal income tax on it. All financial activity, including money you put in and take out, must be documented and reported to the Internal Revenue Service (IRS) when you file your taxes.

Required HSA Tax Information and Forms

Your HSA administrator, the financial institution holding your account, is responsible for sending you two forms. The first is Form 1099-SA, Distributions From an HSA, which you will receive if you took any money out of your account during the year. Box 1 of this form, labeled “Gross distribution,” shows the total amount you withdrew.

The second document from your administrator is Form 5498-SA, HSA Information. This form details all contributions made to your account for the tax year, including those from your employer and any you made directly. Box 2, “Total contributions,” shows the combined amount deposited. This form commonly arrives after the April tax filing deadline, so if it has not arrived, use your own records like pay stubs to determine your contribution amounts.

Beyond these official forms, you must keep detailed receipts for all qualified medical expenses you paid for using your HSA funds. These receipts serve as proof that your distributions were used for their intended purpose. You will also need records of any contributions you made outside of your employer’s payroll system.

Completing Form 8889

With your documents gathered, you can complete Form 8889, Health Savings Accounts (HSAs). This form is used for reporting your account activity to the IRS and is divided into three parts. You must file this form with your annual tax return if you or your employer contributed to your HSA or if you received a distribution from it.

Part I – Contributions and Deduction

This first section of the form is where you calculate your total HSA deduction. You will report the contributions you made to your account and any contributions your employer made, which are reported in Box 12 of your Form W-2 with the code “W.” The form guides you through calculating your maximum allowable contribution for the year based on your health plan type and age. For 2025, the limit for self-only coverage is $4,300, and for family coverage, it is $8,550. Individuals age 55 or older can contribute an additional $1,000.

Part II – HSA Distributions

The second part of Form 8889 deals with the money you took out of your HSA. You will enter the total distribution amount from Box 1 of your Form 1099-SA. Next, you will report the portion of that total that you spent on qualified medical expenses, referencing your collected receipts. If you used funds for non-qualified expenses, that amount is subject to both income tax and a 20% additional tax penalty, which is calculated in this section.

Part III – Income and Additional Tax

The final part of Form 8889 is used to address specific situations and calculate certain penalties. For instance, if you contributed more than the annual limit in a prior year and did not correct the excess, this section helps calculate the tax owed. It is also used to calculate the penalty for failing to meet the “last-month rule.” This rule allows you to contribute the full annual maximum if you become eligible for an HSA by December 1, but requires you to remain eligible for the entire following year. If you fail this requirement for reasons other than death or disability, a portion of your contribution is included in your gross income and is subject to a 10% tax penalty.

Reporting on Your Tax Return

Once Form 8889 is complete, the final step is to transfer the key figures to your main tax return, Form 1040. The HSA deduction you calculated in Part I of Form 8889 is reported as an adjustment to income on Schedule 1 (Form 1040). This deduction directly reduces your adjusted gross income (AGI), which can lower your overall tax liability.

When you submit your tax return, you must include the completed Form 8889. Failing to attach it means you cannot claim the HSA deduction and may lead to inquiries from the IRS. Proper submission ensures that your tax filing is complete and accurately reflects your financial situation.

You do not need to send your Form 1099-SA, Form 5498-SA, or your medical expense receipts with your tax return. However, you must keep these documents for your records for at least three years. The IRS may request to see them at a later date to verify the amounts you reported on Form 8889.