Form 1099 SA Meaning | Who & When File 1099 SA?

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What is Form 1099-SA?

The IRS Form 1099-SA is used to report distributions made from certain types of medical savings accounts.

Here’s a breakdown of the key points:

Purpose of Form 1099-SA

Health Savings Accounts (HSAs): HSAs are tax-advantaged savings accounts that can be used to pay for medical expenses. The Form 1099SA reports distributions from HSAs.
Archer Medical Savings Accounts: Similar to HSAs but less common, these were tax-advantaged accounts. This form also reports distributions from Archer MSAs.
Medicare Advantage MSAs: Medicare Advantage MSAs are medical savings plans available to those enrolled in high-deductible Medicare Advantage plans. These accounts report distributions on Form 1009-SA.

Key Details Reported on Form 1099-SA

Box 1: Gross Distributions – the total amount of money distributed from the account.
Box 2: Earnings on Excess Contributions – any earnings on excess contributions that were withdrawn.
Box 3: Code indicating the type of distribution (e.g., average, excess contribution, prohibited transaction).
Box 4: FMV on Date of Death – if the account holder died, the fair market value of the account on the date of death.
Box 5: Indicates whether the recipient is the account holder, spouse, or beneficiary.

Tax Implications

Qualified medical expenses: Distributions used to pay for qualified medical costs are not taxed.
Non-Qualified Expenses: Distributions used for non-qualified expenses are subject to income taxes and can incur an additional penalty of 20% unless the account owner is over 65 years old, disabled, or deceased.

Filing Requirements

You must include the distribution in your tax return if you receive Form 1099SA. You can calculate the tax owed if the distribution was used to pay for medical expenses. Use Form 8889 or Form 8853, depending on whether the distribution was made from an HSA, MSA, or Medicare Advantage MSA.

Would you like to know more about a particular part of Form 1099SA or receive guidance on how to include it in your tax return?

Who files a 1099-SA?

The financial institutions or trustees that manage Health Savings Accounts (HSAs), Archer MSAs, or Medicare Advantage MSAs file Form 1099 with the IRS and provide a copy to the account holders.

When to File 1099 SA?

The IRS must receive Form 1099SA by the 28th of February (or 31st of March if you are filing electronically) in the year that follows the distribution. The account holder must receive a copy by the 31st of January.

What is Form 1099-SA Used for?

The IRS and account holders are notified of distributions made from certain types of medical savings accounts using Form 1099SA. These accounts include:

Health Savings Accounts (HSAs) are accounts that offer tax advantages to individuals who wish to save money for medical expenses.
Archer Medical Savings Accounts: A tax-advantaged type of account similar to HSAs that were available before they became more common.
Medicare Medical Savings Accounts: Accounts that are used to save money for medical expenses by those who have a Medicare Advantage plan with a high deductible.

Primary Uses of Form 1099-SA

Report Distributions:

This is the record of the money that was distributed during the taxation year. This can include:

Payments for medical expenses are made directly to the healthcare provider.
Reimbursements for medical expenses that have already been paid.
Distributions are non-qualified (those that are not used to pay for medical expenses).

Determine Taxability:

This form is used to determine if the distributions are taxed.

Qualified distributions: If the money was spent on qualified medical expenses, the distribution is not taxed.
Distributions that are not Qualified: The distribution will be subject to income taxes and a possible additional 20% penalty unless there is an exception (such as if the money was spent on something other than medical expenses).

Support Tax Filing:

The recipient of Form 1099SA will use the information on the form to fill out their tax return. They will use the following information:

Form 8889 for HSAs.
Form 8853 is for MSAs, Medicare Advantage MSAs. These forms are used to determine the tax portion of distributions as well as any penalties.

Also See: Form 2553 | Form 1042-S | IRS Form SS-4 | Form 1040 ES