What Is Form 8969 and Who Must File It?

Form 8889, Health Savings Accounts (HSAs), is used to report activity for specific tax-favored health plans. The form reconciles contributions to and distributions from Health Savings Accounts, Archer Medical Savings Accounts (MSAs), and Medicare Advantage (MA) MSAs. Taxpayers use this form to calculate their allowable HSA deduction, report withdrawals, and determine if any portion of those withdrawals is taxable.

Who Must File Form 8889

You must file Form 8889 if you had certain interactions with a Health Savings Account during the tax year. Filing is required if you:

• Received a distribution from your HSA.
• Made contributions to your HSA that you or someone on your behalf intends to deduct.
• Acquired an interest in an HSA because of the account holder’s death.
• Must include certain amounts in your income because you were no longer an eligible individual during the “testing period” after using the last-month rule for contributions.

Information and Documents Needed

To complete Form 8889, you will need several documents. You will need your Form W-2, Wage and Tax Statement, to find employer contributions to your HSA, which are reported in Box 12 with code W. These amounts are not included in your taxable income.

You will also need Form 1099-SA, which is sent by your account’s financial institution and details the gross distribution amount you took during the year. The figure in Box 1 is used for reporting withdrawals, but it does not specify if the funds were used for qualified medical expenses.

Lastly, Form 5498-SA provides a complete picture of all contributions made to your account for the tax year. This includes those from your employer, direct contributions from you, and any rollovers.

Completing Form 8889

Form 8889 is divided into three parts that guide you through the necessary calculations.

HSA Contributions and Deduction (Part I)

This section is for calculating your tax deduction. You determine your contribution limit based on your high-deductible health plan (HDHP) coverage, either self-only or family. You then report your personal contributions and the form guides you through a calculation to find your final deductible amount, ensuring you do not exceed annual IRS limits.

HSA Distributions (Part II)

This part addresses the money you withdrew from your account. You will enter the total distributions from Form 1099-SA and then report how much of that amount was used for qualified medical expenses. You should keep receipts for these expenses for your records. If your distributions exceed your qualified medical expenses, the difference may be taxable.

Income and Additional Tax (Part III)

This section is for calculating any taxes and penalties owed. If you used distributions for non-qualified expenses, the taxable amount is determined here and may be subject to an additional 20% tax. This part also addresses penalties for excess contributions or for failing to remain an eligible individual during the testing period after using the last-month rule.

Filing the Completed Form

Form 8889 is not filed by itself but must be attached to your annual federal income tax return, such as Form 1040, 1040-SR, or 1040-NR. The figures calculated on Form 8889 are then transferred to your main tax return.

Your HSA deduction from line 13 is reported on Schedule 1 of Form 1040 as an adjustment to income. Any taxable income from distributions or additional taxes are also transferred to the appropriate lines on your Form 1040 and its schedules.