What HSA Forms Do I Need for Taxes?

Health Savings Accounts (HSAs) offer tax advantages for medical expenses but come with specific tax reporting requirements. If you contributed to or withdrew from an HSA last year, certain IRS forms must be included when filing taxes to ensure compliance and avoid penalties.

Form 1099-SA

Issued by the HSA provider, Form 1099-SA reports distributions taken from the account during the tax year. The IRS tracks how funds are used, whether for qualified medical expenses or other purposes.

Box 1 lists the total amount distributed, while Box 3 specifies the type of distribution, such as a normal withdrawal or excess contribution removal. Withdrawals for qualified medical expenses remain tax-free, but non-medical withdrawals are taxable and subject to a 20% penalty unless the account holder is 65 or older, disabled, or deceased.

Box 5 indicates whether the distribution came from a Medicare Advantage MSA, which follows different tax rules. If the form contains errors, the HSA provider must issue a corrected version. Taxpayers should verify the information before filing to avoid discrepancies that could trigger an IRS inquiry.

Form 5498-SA

HSA custodians issue Form 5498-SA to report contributions made to the account. This form is informational and helps taxpayers verify reported contributions. The IRS receives a copy to ensure accuracy.

Box 2 details total contributions made during the tax year, including those by the account holder, an employer, or a third party. For 2024, the maximum contribution is $4,150 for individuals and $8,300 for families, with an additional $1,000 catch-up contribution for those 55 or older. Exceeding these limits results in a 6% excise tax on the excess amount unless corrected before the tax filing deadline.

Box 3 reports contributions made between January 1 and April 15 of the following year that were designated for the prior tax year. This is relevant for those making last-minute contributions to maximize tax benefits. Since HSA contributions are tax-deductible, ensuring they are correctly categorized can affect tax liability.

Form 8889

Form 8889 is required when filing a tax return to report HSA contributions, distributions, and adjustments. It determines how much of an individual’s contributions are deductible.

The form first establishes whether the taxpayer was eligible to contribute, including enrollment in a high-deductible health plan (HDHP). The IRS applies a “last-month rule,” allowing full-year contribution limits if the individual was HSA-eligible on December 1. If coverage ended before the following December, excess contributions under this rule may become taxable.

Form 8889 also reconciles distributions with medical expenses. If funds were withdrawn but not used for qualified expenses, the form calculates the additional tax liability. HSAs allow tax-free growth, but any earnings on excess contributions not removed by the deadline must be reported. Keeping detailed records of expenses is crucial to avoid IRS penalties.

HSA Information on W-2

Employers that contribute to an HSA or facilitate pre-tax payroll deductions must report these amounts on Form W-2. The total contributions made by both the employer and the employee appear in Box 12, using code “W.” This ensures that pre-tax HSA contributions are properly excluded from taxable wages.

While HSA contributions are not subject to federal income tax, they impact payroll taxes. Employer and pre-tax employee contributions lower the amount of wages subject to Social Security and Medicare taxes, which may slightly reduce future Social Security benefits. Employees making post-tax HSA contributions outside of payroll deductions must claim their deduction separately on Form 8889.

If an employee exceeds the IRS-mandated contribution limits due to employer contributions, the excess amount becomes taxable unless corrected. Unlike 401(k) excess deferrals, which require employer intervention, HSA excess contributions must generally be withdrawn by the individual to avoid penalties. If an employer mistakenly overfunds an HSA, the IRS allows for limited corrections under specific circumstances, such as administrative errors.

Deadlines for Submitting HSA Documents

Timely submission of HSA tax forms is necessary to avoid penalties. Each document has a specific deadline.

Form 1099-SA, which reports distributions, must be provided to account holders by January 31, as it is needed for Form 8889 when filing a tax return. Form 5498-SA, which reports contributions, is sent by May 31 to account for contributions made up until the April 15 tax deadline for the prior year. Taxpayers do not need to submit Form 5498-SA but should review it for accuracy.

For tax filers, Form 8889 must be submitted with Form 1040 by April 15. If an extension is filed, the deadline moves to October 15, but any taxes owed on non-qualified HSA withdrawals must still be paid by April 15 to avoid interest and penalties. Employers must report HSA contributions on Form W-2, which must be distributed to employees by January 31. Errors should be corrected promptly to prevent IRS scrutiny.