Form 1099-SA

Form 1099-SA is an IRS tax form used to report distributions from the following types of accounts: Health Savings Accounts (HSAs), Archer Medical Savings Accounts (Archer MSAs), and Medicare Advantage MSAs (MA MSAs).

The form is issued by the custodian (usually a bank or financial institution) when money is withdrawn from any of these accounts.

Key Facts

• Reports Withdrawals (Distributions): Any time you take money out of an HSA, Archer MSA, or MA MSA, the amount is reported on this form.
• Qualified Medical Expenses: If you use the money for qualified medical expenses, the distribution is tax-free.
• Taxable If Misused: If you use the money for non-medical expenses, it becomes taxable income and may be subject to a 20% penalty (unless you're 65+, disabled, or deceased).
• Who Sends It: The bank or administrator of your HSA/MSA account must send you the 1099-SA by January 31.
• You Must File IRS Form 8889 (for HSAs): This is where you tell the IRS how you used the money; if all distributions were for medical purposes, no tax is due.
• Boxes Include:
  
  • Box 1: Gross distribution
  • Box 2: Earnings on excess contributions
  • Box 3: Distribution code (explains why money was withdrawn)
  • Box 4: Fair market value of the account at death (if applicable)
  • Box 5: Type of account (HSA, Archer MSA, or MA MSA)

1. Do I have to pay taxes on my 1099-SA distribution?

Only if you used the money for non-qualified expenses. Otherwise, it’s tax-free.

2. What should I do with Form 1099-SA when filing taxes?

Use it to complete Form 8889 (if HSA) or Form 8853 (if MSA), which you file with your Form 1040.

3. What if I used some of the money for medical and some for non-medical expenses?

You’ll report this on Form 8889, and only the non-medical portion is taxable.

4. What do the codes in Box 3 mean?

Common distribution codes include:

• 1: Normal distribution
• 2: Excess contribution returned before tax deadline
• 3: Disability
• 4: Death distribution
• 5: Prohibited transaction

5. What if I got a 1099-SA but didn’t take out any money?

This might be a mistake - contact the custodian or bank that issued the form to verify and correct it.