The IRS requires all health savings account holders to file IRS Form 8889 with their tax return. In addition, their HSA administrator is required to send all account holders forms 1099-SA and 5498-SA, though these forms don’t need to be submitted with your taxes…so what are they for?
It’s safe to say that sometimes all these forms can be a little confusing, and the wording can quickly get rather convoluted. Just the thought of filing your taxes in the first place can leave you feeling overwhelmed, especially with additional provisions like health savings accounts that require some extra paperwork. With all of that in mind, we would like to help you out by breaking down or ‘decoding’ a couple of these forms, the 1099-SA and the 5498-SA as pictured below.
The 1099-SA reports all withdrawals (distributions) from your HSA during the tax year indicated on the form. This form is mailed to you and filed with the IRS in January of each year. It does not need to be sent to the IRS with your taxes, but it does need to be kept with your tax records.
Box 1: Total money withdrawn from your account. This money may have been payable to a medical provider or to you.
Box 2: Interest earned on any deposit that was made in excess of what the IRS allows and was withdrawn before the due date of your income tax return.
Box 3: Identifies the type of withdrawals you made during the year.
1 – Normal distribution
2 – Excess contributions that were withdrawn
3 – Disability
4 – Death distribution to estate
5 – Prohibited transactions
6 – Death distribution after year of death to someone other than spouse or estate
You will receive a separate 1099-SA for each distribution code that applies to you.
Box 4: Fair market value of account at time of account holder’s death.
The 5498-SA reports all contributions made to your HSA during the tax year indicated on the form, as well as contributions made from January 1st - April 15th of the current calendar year that were applied to the tax year indicated on the form. This form is mailed to you and filed with the IRS in May of each year. It does not need to be sent to the IRS with your taxes, but it does need to be kept with your tax records.
Box 1: If you have an MSA, this box shows the total deposit made into the MSA for the tax year indicated on the form (includes deposits made between January 1st - April 15th of the current calendar year).
Box 2: Total Contributions made to your HSA during the tax year indicated on the form. This will also include any contributions made during that tax year for any prior tax year, and any contributions made through an IRA.
Box 3: Contributions made from January 1st - April 15th of the current calendar year that were applied to the tax year indicated on the form.
Box 4: Deposits made into your account as a result of a rollover of funds from an MSA or an HSA. These amounts are not included in any of the first three boxes.
Box 5: Fair market value of your HSA or MSA on December 31st of the tax year indicated on the form.
1099-SA’s are issued in January summarizing the prior years HSA withdrawals (qualified or not) and 5498-SA’s are issued in May of each year summarizing total HSA deposits for the prior year. You have until April 15th or before you file your taxes, which ever comes first, to contribute to an HSA for the prior year.
Hopefully this article helped to clear up some of the confusion with these two forms! If you’re still feeling a little puzzled or have a question about something we didn’t address, please feel free to contact us and ask! We’d love to help. You can visit our website at www.AmericanHealthValue.com, or give us call at 800-914-3248. We look forward to hearing from you.
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