Form 1099-SA is a tax document issued by the IRS to report distributions from tax-advantaged accounts like Health Savings Accounts (HSAs), Archer Medical Savings Accounts (MSAs), and Medicare Advantage MSAs. The form details withdrawals made during the year, including whether they were used for qualified medical expenses.
If you withdrew funds from one of these accounts in a tax year, the financial institution or plan administrator is required to send you a 1099-SA to file with your tax return.
Who Receives a 1099-SA?
You’ll receive Form 1099-SA if:
- You took money out of an HSA, Archer MSA, or MA MSA.
- Funds were rolled over to another account.
- You inherited an HSA and received a distribution.
- The account holder passed away and you are the beneficiary.
Each distribution will be detailed on the form, including the amount and whether it was taxable.
Form 1099-SA includes:
- The total distributions made from your HSA or MSA
- The type of account involved (Box 1)
- The earnings on excess contributions (Box 2)
- The distribution code, which indicates the reason for withdrawal (Box 3)
- The fair market value of the account on the date of death, if applicable (Box 4)
- Any trustee-to-trustee transfer (Box 5)
These details help the IRS determine whether the distributions were taxable or tax-free based on how you used the withdrawn funds.
How Is 1099-SA Used When Filing Taxes?
- Qualified expenses: If the funds were used for qualified medical expenses, they are not taxable.
- Non-qualified expenses: If used for anything else, they may be subject to income tax and a 20% penalty, unless exceptions apply (like disability or age 65+).
- You must also file Form 8889 with your tax return to report the details and avoid penalties.
Key Points for 2025
- The 1099-SA form for 2024 distributions is typically mailed by January 31, 2025.
- With increased adoption of HSAs, accurate reporting of withdrawals is essential for avoiding tax penalties.
- Ensure you match your 1099-SA with receipts or account statements that show qualified medical expenses to support your tax return.
Common Mistakes to Avoid
- Failing to report: Always include the 1099-SA and Form 8889 when you file your taxes if you had distributions.
- Mixing expense types: Keep detailed records separating qualified from non-qualified expenses.
- Assuming all withdrawals are tax-free: Only distributions for IRS-approved medical costs are exempt from taxes.
