Form 1099-SA: Distributions From an HSA, Archer MSA, or Medicare Advantage MSA

When you take money out of your HSA (Health Saving Account) for any reason, the HSA trustee or custodian must prepare an IRS Form 1099-SA. The trustee or custodian will send a copy of IRS Form 1099-SA to you and to the IRS. In turn, you will need to use the information on IRS Form 1099-SA to complete IRS Form 8889, which must be included with your 1040 form when you file your taxes if you have an HSA.

Form 8889 allows you to inform the IRS of your HSA contributions and distributions and helps you calculate whether any portion of your distribution is taxable and/or subject to the 20% penalty for nonqualified distributions.

Although a qualified HSA distribution is not taxable, you still must file IRS Form 8889 to report any distributions made during the year. However, if you have made nonqualified distributions because you took money out of your HSA that you did not use to pay for eligible medical services, you will be taxed on the distribution at your ordinary income tax rate. If you have not yet reached age 65, you will also be subject to a 20% penalty on the withdrawn funds.