See How Easily You Can Save Money On Taxes With Form 8889

If you started a Health Savings Account (HSA) and made contributions, then you already know there are some nice tax benefits involved.  The contributions you make to this account are not taxed so you can not only save for future medical bills but also get a nice tax advantage.  The way to let the IRS know you are claiming some tax-exempt income is to use IRS Form 8889, Health Savings Accounts.  Fill it  out and make note of your contributions for the tax year using the tax document you got from the administrator of your HSA, and attach IRS Form 8889 to your 1040 when filing your federal tax return.

You Must File IRS Form 8889 If…

When you make contributions during the tax year, as mentioned above, you must file IRS Form 8889.  Also, you must file if you received distributions during the tax year.  What does receiving distributions mean?  It means when you use your HSA money to pay a medical bill…that’s a distribution.  Most financial institutions that offer Health Savings Accounts will issue you a debit card for your account.  Use it like a credit cad for paying medical expenses.  For example, if you have a dentist appointment pay with your HSA debit card.  That’s a distribution from your HSA.  Use IRS Form 8889 to report this distribution.

If you forget at the dentist’s office and use a credit card instead of your HSA debit card, don’t worry you can reimburse yourself from your HSA.  That will then count as a distribution which you would report on IRS Form 8889.

The distributions must be used to pay qualified medical expenses.  If not, then you will pay a penalty for using the health savings account for something other than medical expenses.   For that, use IRS form 5329 to report rule-breaking behavior with tax-favored accounts like a Health Savings Account.f8889

 

Post Navigation