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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 Health Savings Account (HSA) tax questions. We organized the FAQs into three categories: Tax Documents; Contributions and 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.

January/Early February: 1099-SA
IMPORTANT: You will NOT receive this form if you DID NOT withdraw funds from your HSA in 2019.

The 1099-SA is used to report any distribution (withdrawal) of funds from your HSA during 2019. You must report distributions from your HSA on IRS Form 8889. You will receive an email once this form is available. If you elected to receive paper documents, you will receive this form in the mail in late January/early February. Please speak with your tax advisor if you need help with this form.

May: 5498-SA
The 5498-SA form reports all contributions to your HSA for 2019, including those contributed for 2019 between Jan. 1, 2020 and April 15, 2020. You will receive an email once this form is available. If you elected to receive paper documents, you will receive this form in the mail. Please speak with your tax advisor if you need help with this form.

The 1099-SA form will be available mid-to-late January on the Member Website if you had distributions in 2019. If you elected to receive paper documents, you will receive your 1099-SA in the mail in late January/early February.

IMPORTANT: You will NOT receive the 1099-SA form if you DID NOT withdraw funds from your HSA in 2019.

The 5498-SA form will be issued in May 2020, allowing any contributions made in 2020 for 2019 to be included.

You can access your 2019 contributions by logging into the Member Website, clicking on "Account Summary" under the "Accounts" menu, and selecting "HSA Contributions By Tax Year." View these Tax Form Tips for more details.

Note: You are responsible for verifying the accuracy of the applicable IRS maximum each year based upon your situation.

Your IRS 5498-SA form is issued in May so that any 2019 contributions made in 2020 can be included. You have until April 15, 2020 to make contributions for 2019.

If you are an online banking user, your tax documents will be available to you via the Member Website. If you elected to receive your tax documents via paper, you will receive a copy in the mail.

You can access your 1099-SA form by clicking on the "Message Center" tab and then on the “View Statements” link. Please note: your 1099-SA form is typically not available until mid-to-late January. Your 5498-SA form will be available on this page in May 2020.

Note: If you forgot your password, please use the “Forgot Password?” link on the login page, and follow the prompts. We will send 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 2019: This box shows all of your contributions made in the 2019 calendar year, including any 2018 contributions made in 2019.

Box 3 – Total HSA Contributions Made in 2020 for 2019: This box shows any 2019 contributions that you made from Jan. 1 – April 15, 2020.

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

Contributions and 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.

Employee payroll deferral or employer pre-tax HSA contributions (up to the applicable limit) that are reported on Form W-2 as non-taxable are excluded from your gross income. You can claim a tax deduction for HSA contributions (up to the applicable limit) that are made other than tax-free through an employer, even if you do not itemize your deductions on Form 1040.

For 2019, the IRS maximum contribution amount is $3,500, individual; $7,000, family. 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. 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 2019 contributions, the deadline is April 15, 2020.

No, filing an extension has no bearing on the IRS annual contribution deadline. 2019 contributions need to be deposited by April 15, 2020 to count for the 2019 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 2019 but remove the excess in 2020, you will receive a 2020 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, 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 HSA, 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 (Dec> 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: Dec. 1, 2019 through Dec. 31, 2020.)