Who Sends Form 1099-SA for HSA & MSA Distributions?

Form 1099-SA is an IRS tax document that reports distributions from health-related savings accounts. It provides details about funds withdrawn during a tax year. Understanding this form is important for accurate tax reporting.

Understanding Form 1099-SA

Form 1099-SA serves as a record of money taken out of specific health savings accounts. Its primary purpose is to inform both the account holder and the IRS about any funds withdrawn during the calendar year. This includes all distributions, whether they were used for qualified medical expenses or for other purposes.

The information on Form 1099-SA is important for accurate tax preparation. It lists the gross amount of the distribution and includes a distribution code, which indicates the type of withdrawal. This documentation helps individuals determine if their distributions are subject to income tax or additional penalties.

The Accounts Behind Form 1099-SA

Form 1099-SA specifically reports distributions from three distinct types of tax-advantaged accounts designed for medical expenses. A Health Savings Account (HSA) is a personal savings account used in conjunction with a high-deductible health plan (HDHP). Contributions to an HSA are generally tax-deductible, and distributions for qualified medical expenses are typically tax-free.

Archer Medical Savings Accounts (MSAs) were established for self-employed individuals and employees of small businesses who have an HDHP. While new Archer MSAs generally cannot be established after 2007, existing accounts continue to function. Similarly, Medicare Advantage Medical Savings Accounts (MA MSAs) are for Medicare-eligible individuals enrolled in a high-deductible Medicare Advantage plan.

Issuers of Form 1099-SA

The responsibility for sending Form 1099-SA lies with the financial institution, trustee, or custodian that manages the Health Savings Account (HSA), Archer Medical Savings Account (MSA), or Medicare Advantage Medical Savings Account (MA MSA). These entities are responsible to track and report all distributions made from these accounts.

Financial institutions are required to send Form 1099-SA to account holders by January 31st of the year following the distributions. For example, distributions made in 2024 would be reported on a Form 1099-SA sent by January 31, 2025.

Actions After Receiving Form 1099-SA

Upon receiving Form 1099-SA, account holders must use the information to report their distributions to the IRS. For Health Savings Account distributions, this typically involves completing IRS Form 8889, Health Savings Accounts (HSAs), and attaching it to their federal income tax return, such as Form 1040. Distributions from Archer MSAs or MA MSAs are generally reported on IRS Form 8853. The distribution code on Form 1099-SA helps determine if the withdrawals were used for qualified medical expenses, which are usually tax-free. If funds were used for non-qualified expenses, they may be subject to income tax and an additional 20% penalty.

If Form 1099-SA is not received by the January 31st deadline, individuals should contact their financial institution or the entity managing their account. Many providers also make these forms available electronically through online portals. If the information on a received Form 1099-SA appears incorrect, it is important to contact the issuer promptly to request a corrected statement. It is also useful to understand that Form 1099-SA reports distributions, while Form 5498-SA reports contributions to these health savings accounts.