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HSA Tax Time 101

 

You've Got Questions. We've Got Answers

HSA Tax Time 101 is a resource that provides answers to some of the most frequently asked HSA tax questions. We’ve organized the FAQs into three categories: Tax Documents; Contributions & Distributions; and Tax Time Reminders. Please visit irs.gov for additional information and resources, including IRS Publication 969, which explains the tax advantages and requirements of an HSA.

Please note: HSA Bank does not provide legal or tax advice. Please contact your tax professional with any tax-related questions.

Tax Documents

You may receive both a 1099-SA and 5498-SA from us. Note: Your 5498-SA form will not be available until May 2017.

The 1099-SA is used to report any distributions from your Health Savings Account (HSA) during 2016. You must report distributions from your HSA on IRS Form 8889. Please speak with your tax advisor if you need help with this form.

The 5498-SA form reports all contributions to your HSA for 2016. You will receive an email once this form is available. You must report contributions from your HSA on IRS Form 8889. Please speak with your tax advisor if you need help with this form.

The 1099-SA form is now available on the Member Website if you had distributions in 2016. If you elected to receive paper documents, you will also be receiving your 1099-SA in the mail by the end of January.

The 5498-SA form will be issued in May 2017, allowing any contributions made in 2017 for 2016 to be included.

You can access your 2016 contributions by logging into the Member Website, clicking on the "Accounts" tab, and selecting "HSA Contributions By Tax Year." View these Tax Form Tips for more details.

Your IRS 5498-SA form is issued in May so that any 2016 contributions made in 2017 can be included. You have until April 18, 2017 to make contributions for 2016.

Your tax documents will be made available to you via the Member Website. If you elected to receive your tax documents via paper, you will also receive a copy in the mail.

You can access your 1099-SA form by clicking on the "Statements & Notifications" tab. Your 5498-SA form will be made available on this page in May 2017.

Note: If you have forgotten your password, please use the “Forgot Password?” link on the login page, follow the prompts, and you will be emailed a temporary password to the email address on file.

Box 1 – Gross Distribution: This box shows the total amount distributed from the account during the tax year.

Box 2 – Earnings on Excess Contributions: This box shows the earnings on any excess contributions distributed from an HSA by the filing due date of the current income tax return.

Box 3 – Distribution Code: This code identifies the type of distribution that occurred.

Note: Please see the reverse side of your IRS Form 1099-SA for official IRS code definitions.

Box 2 – Total Contributions Made in 2016: This box shows all of your contributions made in the 2016 calendar year, including any 2015 contributions made in 2016.

Box 3 – Total HSA Contributions Made in 2017 for 2016: This box shows any 2016 contributions that you made from January 1 – April 18, 2017.

Note: Please see the reverse side of your IRS Form 5498-SA for official IRS code definitions.

Contributions & Distributions

Distributions from your HSA and contributions made for or during the previous year need to be reported on IRS form 8889. This is important because it needs to match what is reported on the 1099-SA form. Forgetting to report may result in an IRS audit.

You can claim a tax deduction for contributions up to the applicable maximum contribution that you, or someone other than your employer, make to your HSA even if you do not itemize your deductions on Form 1040. Contributions up to the maximum contribution limit made by your employer may be excluded from your gross income.

For 2016, the IRS maximum contribution amount is $3,350, individual; $6,750, family. For 2017, the IRS maximum contribution amount is $3,400, individual; $6,750, family. For more information, please visit our IRS Guidelines and Eligible Expenses page.

Yes, yearly contributions should be made by your tax filing deadline. For making 2016 contributions, the deadline is April 18, 2017.

No, filing an extension has no bearing on the IRS annual contribution deadline. 2016 contributions need to be deposited by April 18, 2017 to count for the 2016 contribution limits.

Your employer’s HSA contributions are reported on your W2, and are also included as part of the total account contributions listed on form 5498-SA.

You may withdraw money at any time for IRS-qualified medical expenses incurred after your HSA was established.

HSA contributions that exceed the IRS annual limit can incur tax penalties and/or IRS fees. Excess contribution removals are reported in the year in which the removal was made, not in which the excess was made. For example, if you have made excess contributions in 2016 but remove the excess in 2017, you will receive a 2017 1099-SA showing the removal. Even when the excess is removed, please note that the 5498-SA will always show the contribution.

Individual accountholders age 55 and older can make an additional $1,000 catch-up contribution. Eligible spouses over 55 can only make catch-up contributions to his/her account.

Tax Time Reminders

No, HSA Bank does not provide tax or legal advice. Please consult with a qualified tax or legal professional if advice is needed regarding your specific situation.

If you should lose your health insurance coverage, you are required to prorate the contribution limits for the months in which you had insurance.

HSA eligibility ends upon enrolling in Medicare. You can still contribute the prorated IRS contribution limit until the IRS contribution deadline. Once you enroll in Medicare, you can keep the account open and continue to use funds already in the account.

While you are not required to submit any receipts to HSA Bank for your Health Savings Account, you absolutely should save any receipts and Explanation of Benefits (EOBs) for IRS-qualified medical expenses for tax purposes. Using our online expense tracker, you can easily enter and track these expenses by securely uploading receipts and supporting documentation.

According to the last-month rule, if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers), you are considered an eligible individual for the entire year. Therefore, you are treated as having the same HDHP coverage for the entire year as you had on the first day of that last month.

If contributions were made to your HSA based on you being an eligible individual for the entire year under the last-month rule, you must remain an eligible individual during the testing period. For the last-month rule, the testing period begins with the last month of your tax year and ends on the last day of the 12th month following that month. (For example: December 1, 2016 through December 31, 2017.)