It’s officially tax season! We have the information you need about taxes and HSAs, and what you need to do before April 18.
As you know, tax filing season means that there are often numerous IRS forms that have to be filled out. When it comes to your HSA, there are two other very important documents for this process – Form 8889 and Form 1099-SA – in addition to Form 1040.
Form 8889
Form 8889 is used to report all contributions and withdrawals associated with your HSA in 2015. This form is to be used if, in the previous year, you or anyone else made contributions to your HSA, you received distributions, or you acquired an interest in an HSA due to the death of the account beneficiary. Use Form 8889 to:
- Report all HSA contributions, even those made on your behalf and employer contributions
- Figure your HSA deduction
- Report distributions from HSAs
- Figure amounts you must include in income and any additional taxes you may owe
Download instructions for Form 8889.
Form 1099-SA
You should receive the 1099-SA from the HSA administrator reporting withdrawals from your account. Any distributions you received should be reported on the provided form and that total should be carried over to Form 8889, as mentioned in the previous paragraph.
Download instructions for Form 1099-SA.
Tax Advantages
That’s the important stuff to know regarding taxes and HSAs as the annual filing deadline approaches. However, there are other tax advantages to an HSA that you may not be aware of.
For instance, withdrawals for eligible medical expenses are tax-free at any age. Keep in mind that you should keep your receipts to validate your withdrawal, however, as your HSA administrator is not obligated to confirm the veracity of the withdrawal.
Another perk is that you may withdraw money for eligible medical expenses at any time. There is no deadline for using the money. That means that you can pay out-of-pocket for expenses like copays and deductibles, let your account grow with tax-free interest, and later on make tax-free withdrawals to get reimbursed. The only caveat is that your receipts must show that you incurred the expense after the account was established. Of course, you also have to ensure that you report the year you make the withdrawal.
Tax Filing Deadline
One final note — you may be wondering why the filing deadline is not on the traditional date of April 15. Washington, D.C. is celebrating Emancipation Day on Friday, April 15, so the deadline was extended to Monday, April 18, for most Americans. For those who live in Maine and Massachusetts, the deadline is April 19 due to Patriots Day.
Maximize your contributions for 2015 before the deadline runs out! You have all the way up until April 18 to make contributions for the previous calendar year.
If you need assistance with tax filing, contact a tax preparation specialist.
