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What HSA Tax Forms Do You Need to Fill? We Know

6 min read

30 sec brief

  Tax season is coming, you have a Health Savings Account (HSA), and you’re not prepared.

Tax season is coming, you have a Health Savings Account (HSA), and you’re not prepared.

You’re aware of the incredible tax advantages an HSA has. But what you may not be aware of are what HSA tax forms you have to fill in and how to make sure your HSA contributions are tax exempt.

You wouldn’t want to pay for more tax than you owe, would you?

When filing taxes HSA Form 8889 is the form you need to fill and give to the IRS in order to claim your deductions.

Filling in Form 8889 isn’t a simple feat. You’ll need to gather a few other IRS forms ahead of time to fill it.

Jump to:

Quick Recap of The Tax Benefits of HSAs

Considering the headache of filling in form 8889, you might question why to bother with an HSA. But before you give up, think about the following benefits an HSA offers:

  • You can deduct your HSA contributions on your personal income tax return.
  • Contributions to your HSA can be taken from your paycheck before they get taxed.
  • Interest & dividends gains from your HSA fund are tax-deferred.
  • Your employer can make contributions to your HSA

On top of these tax advantages, when you retire at age 65, you can withdraw from your HSA for non-medical expenses, like a retirement plan, tax-free.

Before 65, you can only withdraw from it for qualified medical expenses, or face a 20% tax penalty.

HSA Eligibility and Contribution Limits

To qualify for an HSA you have to:

  • Be covered by a high-deductible health plan (HDHP)
  • Be not enrolled in Medicare
  • Not be a dependent on another person’s tax return.

For 2019 the IRS has set the contribution limits for an HSA to $3500 a year for individuals and $7000 for families. If you’re over 55 you get an extra $1000 a year for catch-up contributions.

If you exceed these limits you may be liable to pay a 6% excise fee on the excess contributions.

Other Forms You’ll Need to File HSA Form 8889

Before you fill Form 8889 and attach it to your Form 1040 for your tax return, you’ll need to gather the following documents ahead of time to file your 8889.

  • IRS Form 1040: Individual Income Tax Return. You’ll need to use the 1040 long form to help file your HSA. You can’t use the 1040 EZ form.
  • IRS Form 5498-SA: Total HSA Contributions. These will be given to you by your HSA custodian by May 31st. It will report the total contributions made to your HSA for the tax year. While you don’t need this to file your tax return, it’s handy to confirm your contribution amount and to keep it in case you get audited.
  • IRS Form 1099-SA: Total HSA Distributions. Again, given to you by your HSA custodian by May 31st. It reports the total distributions from your HSA for the tax year. You will need this form to help you fill in form 8889. You will not get this form if you didn’t make any withdrawals from your HSA.
  • IRS Form W-2: Wage and Tax Statement. Along with your wages and taxes withheld, this will show your employers HSA contributions during the tax year. Box 12-W will show the pre-tax HSA contributions made to your HSA account by you and your employer and will help you complete Form 8889. Contributions made by other means, like after-tax, will not turn up on your W-2 and should be reported on Form 8889.
  • IRS Form 5329: Excess HSA Contributions. This needs to be submitted with your form 1040 to report excess HSA contributions. Only get and fill this if applicable. More information from the irs.gov website here.

Forms You’ll Need for Different States

While HSAs are tax exempt from federal tax, it gets a bit more complicated on the state level. HSAs are tax exempt from most state income tax filings, but not all.

Some states tax your HSA contributions, and some also tax your earnings. Check your local state tax information. The information presented in this article is no substitute for a tax advice, so please do check the rules in your state of domicile and consult your tax advisor.

State Form Taxes HSA contributions Taxes HSA earnings & dividends
Alabama Form 40 Yes Yes
California Schedule CA 540 Yes Yes
New Hampshire Form DP-10 Yes No
New Jersey Form NJ 1040 Yes Yes

In Closing

While filling in forms for your HSA account can seem daunting, the tax advantages make it worthwhile. If you have any difficulties, look at the guidelines on irs.gov and speak to a tax advisor.

Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.

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