Form 1099-SA reports money taken out of a health savings account (HSA), Archer MSA or Medicare Advantage MSA during the year. Whether that money is taxed depends on what it was spent on.
| Who | Role |
|---|---|
| HSA trustee or custodian | Issues Form 1099-SA for the year’s distributions |
| Account holder (employee) | Reports distributions on their tax return and keeps receipts |
| Employer | Usually only offers the plan and sends contributions; does not file this form |
Contributions to an HSA are reported on a different form, Form 5498-SA. Employers often get questions about both at tax time, so a short explainer for employees saves HR time.
EZTime digital HR forms let you send, sign and file employee documents online.
An employee, age 42, takes $1,200 out of her HSA during the year. $900 pays for qualified medical expenses: a dental procedure and prescriptions. She uses $300 for a non-medical expense.
Her Form 1099-SA shows a $1,200 gross distribution. On her return, the $900 used for qualified expenses is not taxed. The $300 is included in her income, and because she is under the Medicare eligibility age and not disabled, she also owes an additional 20 percent tax on it, $60.
If she had kept receipts showing the $300 was in fact for a qualified expense she forgot about, the result would have been different. That is why HSA providers tell account holders to keep receipts.
Employers can help without giving tax advice: tell employees which provider holds their HSA, when the provider usually sends tax forms, and where to find receipts and statements online. Questions about how a specific distribution is taxed belong with a tax professional.
A long-serving employee, past the Medicare eligibility age, takes $2,000 from his HSA in the year. $1,400 goes to qualified medical expenses and $600 to a home repair.
His Form 1099-SA shows $2,000. The $1,400 is not taxed. The $600 is included in his income, but because he has reached the Medicare eligibility age, the additional 20 percent tax does not apply to it. Under age 65 and not disabled, the same $600 would also have carried $120 of additional tax.
To report distributions from an HSA, Archer MSA or Medicare Advantage MSA.
The account’s trustee or custodian, such as the bank or HSA provider, not the employer.
Not if it is used for qualified medical expenses. Amounts used for other things are included in income and usually carry a 20 percent additional tax.
Form 1099-SA reports money taken out of the account. Form 5498-SA reports contributions into it.
No. The HSA trustee or custodian files it and sends a copy to the account holder. The employer usually only offers the plan and sends contributions.
Compare it with the account statements first. If it is still wrong, contact the HSA provider that issued it.
EZTime turns clock-ins and approved corrections into signed monthly reports you can export to PDF or Excel for payroll.