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Form 8889

Tax Year 2012

Health Savings Account
This worksheet is used to report information and make calculations concerning the taxpayer's Health Savings Account, including the following:
  • Report health savings account (HSA) contributions including those made on the taxpayer's behalf and employer contributions,
  • Calculate the taxpayer's HSA deduction,
  • Report distributions from the taxpayer's HSA, and
  • Calculate the amount of contribution or distributions that is taxable and subject to an additional tax.  

Who Must File
The taxpayer must file Form 8889 if any of the following situations are applicable, even if the taxpayer does not have any taxable income or other reason to file a return:

  1. The taxpayer or someone on the taxpayer's behalf made contributions during the tax year to the taxpayer's HSA,
  2. The taxpayer received a distribution from his or her HSA during the tax year,
  3. The taxpayer failed to be an eligible individual during the testing period, or
  4. The taxpayer acquired an interest in an HSA because of the death of an account holder.

Eligibility to Make Contributions to HSA
In order to be eligible to make contributions to an HSA, an individual must meet the following requirements:

  1. He or she must be covered under a high deductible health plan (HDHP defined below),
  2. He or she cannot have any other health coverage except as permitted (see below),
  3. He or she cannot be claimed as a dependent on another person's tax return, and
  4. He or she must be an eligible on the first day of the month to take an HSA deduction for that month. 

HDHP
This is a health insurance plan that meets the following limits in 2012:

  Self-Only
Coverage
Family
Coverage
Minimum Annual Deductible $1,200 $2,400
Maximum Annual Out-Of-Pocket Expenses (Other Than For Premiums) $6,050 $12,100

 

Other Health Coverage Permitted
The taxpayer cannot have other health coverage except as follows

  • Disability or accident coverage
  • Dental care coverage
  • Vision care coverage
  • Long-term care coverage
  • Specific illness or disease coverage
  • Workers' compensation coverage
  • Liability insurance
  • Coverage for a fixed amount per day of hospitalization

 

Contributions to an HSA
For 2012, the annual contribution and deduction limit is $3,100 if the taxpayer has a high deductible health plan with self-only coverage, or $6,250 if the taxpayer has family coverage. If the taxpayer is age 55 or older at the end of 2012, their additional allowable contribution amount is $1,000. A taxpayer cannot deduct any contributions to an HSA that were made in the same month in which the taxpayer was enrolled in Medicare.

 

Distributions from an HSA
If distributions from an HSA are used for qualified medical expenses for the account beneficiary, spouse, or dependents, the distributions are excludable from gross income. Any amounts not used for qualified medical expenses are includible in gross income and are subject to an additional 20% tax unless an exception applies.

 

Qualified Medical Expenses
Qualified medical expenses for HSA purposes are unreimbursed medical expenses that could otherwise be deducted on the Schedule A worksheet with the exception of the list below. See the Schedule A Medical and Dental Expenses worksheet article and IRS Pub. 502, Medical and Dental Expenses for more details. 

 

The taxpayer may not deduct the costs of any non-prescription medicines with the exception of insulin.  

 

The taxpayer may not treat insurance premiums as qualified medical expenses unless the premiums are for one of the following:

  • Long-term care (LTC) insurance,
  • Health care continuation coverage, or
  • Health care coverage while receiving unemployment compensation under Federal or state law.
  • Medicare and other health care coverage if the taxpayer was 65 or older, however, this does not apply to amounts paid for a Medicare supplemental policy.

See IRS Pub. 969, Health Savings Accounts and Other Tax-Favored Health Plans, for more details or the IRS 2012 Instructions for Form 8889.

General Directions for Worksheet
Add the Form 8889 Worksheet to the return by clicking on the "Edit" button next to Taxpayer or Spouse, whichever is applicable, both of which can be found directly below "Form 8889" in the Federal Worksheets list. The taxpayer and/or spouse must file an individual Form 8889 for their own HSA activity.
Part I - HSA Contributions and Deductions
Employee Name The Employee Name, Social Security number, and Occupation for the correct person (taxpayer or spouse) should already appear. If not, return to the worksheets list by clicking Don't Save, and click on the correct person.
Line 1a Coverage Type
Select from the dropdown list whether this high deductible health plan (HDHP) was a Self-Only Plan or a Family Plan.

 

If the taxpayer was covered by a self-only HDHP and a family HDHP at different times during the year, select the plan that was in effect for a longer period of time.

 

If the taxpayer was covered by both a self-only HDHP and a family HDHP at the same time, the taxpayer is treated as having family coverage during that period.

Line 1b Month Coverage Began
Select the month the coverage under an HDHP began during the tax year from the dropdown list.
Line 1c Month Medicare Benefits Began
Enter the month the taxpayer began receiving Medicare benefits, if applicable.  
Line 2 Employee Contributions
Enter the HSA contributions made by the taxpayer for the tax year, including those made by April 15th of the following tax year that the taxpayer wants applied to this return.

 

Do not include employer contributions or amounts rolled over from another HSA or Archer MSA.

Part II - HSA Distributions
Line 14a
Total Distributions
Enter the total distributions received from all HSAs during the tax year.

 

These amounts should be shown in Box 1 of Form 1099-SA.

Line 14b Distribution Rollovers
Enter the total amount of qualified distribution rollovers from one HSA or Archer MSA to another HSA account that are included in Box 14a above.

 

Also, include any excess contributions and the earnings on those excess contributions included on line 14a that were withdrawn by the due date, including extensions, of the taxpayer's return.

Line 15
Unreimbursed Qualified Medical Expenses
Enter distributions from all HSAs during the tax year that were used for qualified medical expenses of the account beneficiary and his or her spouse and/or dependents that were incurred after the HSA was established.

 

 Important: The taxpayer cannot take a deduction on the Schedule A worksheet as medical and dental expenses for any amounts included on this line.

Lines 17a Additional 20% Tax Checkbox
Check the box if any of the HSA distributions are subject to the additional 20% tax and an exception applies.

 

Exceptions to the Additional Tax
The additional 20% tax does not apply to distributions made if the beneficiary:

  • Dies,
  • Becomes disabled, or
  • Turns age 65.

Example: The taxpayer turned age 63 during the year and received a distribution from an HSA that is included in his income. The taxpayer does not check the box on this line because the taxpayer/account beneficiary did not meet the age exception for the distribution or any of the other exceptions.

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