IRS Form 1099-SA: What It Is, Who Has to File and How

Bank of America does not sponsor or maintain the Flexible Spending Accounts (FSA) / Health Reimbursement Accounts (HRA) that you establish. The programs are sponsored and maintained solely by the employer offering the plan, or by an individual establishing an independent plan. Bank of America acts solely as claims administrator https://turbo-tax.org/form-1099-sa/ performing administrative
tasks pursuant to an agreement with, and at the direction of, the sponsoring employer or individual under an independent plan. The sponsoring employer or individual under an independent plan is solely responsible for ensuring such arrangements comply with all applicable laws.

It also reports your HSA balance as of Dec. 31 of the prior year. If you chose to get paper documents, you’ll get this form in the mail. You won’t get a 5498-SA form if you didn’t have contributions and your balance was zero dollars at the end of the year.

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They can help you remain in compliance with regulations and optimize your long-term tax strategy. IRS penalties vary and will depend on how late you file or if you fail to file at all. According to the IRS instructions for certain information returns, businesses can be fined anywhere from $50-$290 per information return. Therefore, it is very important to file on the correct deadline and file any corrections as needed.

You must report contributions from your HSA on IRS Form 8889. Only certain individuals are eligible to contribute to an HSA or MSA. If you are employed, your employer can make tax-free contributions as well.

Contributing to Your Health Savings Account is easy.

Use your 1099-SA form for the distribution activity and your December bank statement for contributions. IRS form 5498-SA should be retained for your records, but is not required as part of your tax return. You receive a Form 1099-SA if you need to report distributions from the abovementioned accounts on your federal taxes. For example, if you fall ill and need to get medical treatment, you can use the funds from your HSA or MSA to pay for your medical bills. Your HSA provider will have to send you a Form 1099-SA indicating the details of your expenses so you can report the information when you file your income tax return. Health savings accounts (HSAs) are individuals accounts offered or administered by Optum BankÒ, Member FDIC, and are subject to eligibility requirements and restrictions on deposits and withdrawals to avoid IRS penalties.

However, it can be helpful to have close at hand when completing Form 8889. When you withdraw funds from your HSA, referred to as “taking a distribution,” the company that administers your account is required by the IRS to report it. Please note this form is informational only and doesn’t need to be filed with your income tax return.

– Form 1099-SA Distributions from an HSA, Archer MSA, Or Medicare Advantage MSA – Copy B Recipient

Whichever way you choose, get your maximum refund guaranteed. Investments in mutual funds are held in an omnibus account at MLPF&S in the name of Bank of America, N.A., for the benefit of all HSA account owners. Recommendations as to HSA investment menu options are provided to Bank of America, N.A. By the Chief Investment Office (“CIO”), Global Wealth & Investment Management (“GWIM”), a division of BofA Corp. The CIO, which provides investment strategies, due diligence, portfolio construction guidance and wealth management solutions for GWIM clients, is part of the Investment Solutions Group (ISG) of GWIM.

If you have an HSA, you need to include information from two IRS forms – Form 1099-SA and Form 8889 – on your 1040 tax form. Get unlimited advice, an expert final review and your maximum refund, guaranteed with Live Assisted Basic. Form 1099-SA – Distributions From an HSA, Archer MSA, or Medicare Advantage MSA.

Not only can you deduct contributions you make to your account in the year made, but the unspent balances can rollover indefinitely from year to year. These balances can be invested and the earnings from these investments will never be taxed so long as withdrawals are spent on qualifying health expenses. A. In addition to the forms noted above, keep track of your spending in case you have to prove you used funds for qualified medical expenses. It’s up to you to keep track of your expenses and report any funds you use for nonqualified medical expenses. Occasionally, there may be accidental use of HSA or MSA funds on ineligible expenses.

If you do make excess contributions, you can prevent being penalized by completing an Excess Contribution and Deposit Correction Request Form to have excess funds returned to you. A. You are responsible for monitoring the amount deposited into your HSA each calendar year. Keep in mind that if your employer contributes funds, those also count toward the maximum. If you exceed the maximum contribution limit, there is a penalty imposed by the IRS. Please use the information in your 1099-SA form, available online, to fill out IRS tax form 8889.

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It is also important to note that any business entity filing more than 250 forms is required to file electronically. Your year-end statement will include all contribution types with a line, “by your employer or by you via salary reduction” that ties to your W2 in box 12 code W. Your annual and/or monthly statements from HealthEquity will note contributions outside of pre-tax contributions through your employer and are available through your member portal. Form 1099-SA shows the amount of money you spent from your HSA during the tax year.

• IRS Form 1099-SA is used to report Health savings account (HSA), Archer Medical,Medical Savings Account (Archer MSA) and Medicare Advantage Savings Account (MA MSA).
• You can find IRS tax form 8889 in the “Statements & Docs” section after signing in to your account.
• HSA contributions that exceed the IRS annual limit must be removed by the tax filing deadline or you can incur tax penalties and/or IRS fees.
• For up-to-date information, talk with a tax advisor regarding your state’s rules or visit your state’s department of revenue office.
• Sign in to your account online and click on the Help & Tools menu dropdown and select Forms & Documents.

When it comes time to file your end-of-year income tax return, your HSA provider will send you a 1099-SA listing the amount you spent, so you can include that information with your tax return. Employees who are eligible to contribute to a health savings or medical savings account are positioned via the tax law to save quite a bit of tax money, both in immediate and future terms. These rollover balances can even be invested to earn additional income from the balance that will not be subjected to taxation, as long as the money is spent on allowable medical expenses. An individual may use a health savings account to make distributions without taxation if those funds are used for allowable medical expenses. The individual will receive https://turbo-tax.org/ to reflect the exact amount of distributions received from the health savings account in the given tax year. Although funds in your HSA are tax-free, tax penalties may arise.

As you complete your taxes, you can claim a tax deduction for applicable contributions using the IRS Form 5498-SA. Any contributions above the IRS set limit will be considered as taxable income. If you over contribute to your HSA and don’t correct it, you may be charged a 6% penalty rate each year on the excess that remains in your account. As needed, you can take tax-free distributions from your account to pay for qualified medical expenses of the account beneficiary or the beneficiary’s spouse or dependents. You will receive a Form 1099-SA that shows the total amount of your annual distributions (i.e. money you used) reported in box 1. Provided you only use the funds to pay qualified medical expenses, box 3 should show the distribution code No. 1, which indicates normal tax-free distributions.

• He has been an auditor of international companies and a tax strategist for real estate investors.
• Recommendations as to HSA investment menu options are provided to Bank of America, N.A.
• While you’re 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.
• However, it doesn’t cover insurance premiums, except for long-term care insurance, health care continuation coverage, and Medicare.