Once you have determined that you are filing form 8889 for the HSA, you will need to select who owns the account. Next, you will need to select the type of coverage and eligibility. For example, Self Only or Family Coverage.
Line 2 asks for the HSA Contributions for the tax year. This amount is the payments or contributions made that are not from the employer (found on the W-2), roll over from another HSA or Archer MSA, or qualified HSA distributions. Also, do not include any qualified HSA funding distributions. Contributions to an employee's account through a cafeteria plan are treated as employer contributions and are not included on this line.
Line 3, 5, 6, 8 generally will all be filled in automatically within our online interview process. The standard amount to be reported for an eligible individual with self-only coverage is $3100. For the family HDHP is $6250. If, at the end of the tax year, you were age 55 or older and unmarried or married with self-only HDHP coverage for the entire year, you can increase the amount determined by $1000 (the additional contribution amount).
On Line 6, spouses who have separate HSAs and had family coverage under an HDHP at any time during the tax year, use the following rules to figure the amount. (1) If you are treated as having family coverage for each month, divide the amount on line 5 equally between you and your spouse, unless you both agree on a different allocation (such as allocating nothing to one spouse). (2) If you are not treated as having family coverage for each month, use the steps on page 4 of the instructions.
Additional Contribution amount - If, at the end of the tax year, you were age 55 or older and married, use the Additional Contribution Worksheet on page 5 of the instructions if (1) you or your spouse had family coverage under an HDHP and were or were considered to be, an eligible individual on the first of the month, and (2) you were not enrolled in Medicare for the month.
Employer Contributions - Employer contributions (including contributions through a cafeteria plan) include any amount an employer contributes to any HSA for you for the year. These contributions are shown on the W-2 with code W.
Enter the employer contributions made. If your employer made excess contributions, you may have to report the excess as income.
Qualified HSA funding distributions, line 10, is the distribution from your traditional IRA or Roth IRA to your HSA in a direct trustee-to-trustee transfer. This distribution is not included in your income, is not deductible, and reduces the amount that can be contributed to the HSA. This distribution cannot be made from an ongoing SEP IRA or SIMPLE IRA.
HSA Distributions received. Your total distributions include amounts paid with a debit card that restricts payments to health care and amounts withdrawn by other individuals that you have designated. Distributions that you rolled over. Include the distributions you received that qualified as a rollover contribution to another HSA. Also include any excess contributions, including any portion of a direct deposit of an economic stimulus payment, (and the earnings on those excess contributions) included on line 14a that were withdrawn by the due date.
Additional 20% Tax. HSA distributions in income are subject to an additional 10% tax unless one of the following exceptions apply. Exceptions to the additional 10% tax include Dies, Becomes Disabled, or Turns age 65.
Income and Additional Tax for Failure to Maintain HDHP Coverage. Use this part to figure any income and additional tax that must be reported on
Form 1040 or Form 1040NR for failure to be an eligible individual during the testing period for:
- Last-month rule, earlier), or
- A qualified HSA funding distribution (see the instructions for line 10, earlier).
See the discussions indicated to determine the testing period for these items. Include the amount in income in the year in which you fail to be an eligible individual.