Form 1099-SA
What is Form 1099-SA?
Form 1099-SA is an IRS tax form used to report distributions from a Health Savings Account (HSA), Archer Medical Savings Account (Archer MSA), or Medicare Advantage Medical Savings Account (MA MSA) for a given tax year.
What is the purpose of filing Form 1099-SA?
Filing Form 1099-SA serves the following purpose:
- Reports the distributions made from an HSA, Archer MSA, and MA MSA
- Helps the IRS keep track of withdrawals made from the medical savings account
- Verifies whether the withdrawn funds were actually used for the qualified medical expenses
- Helps calculate applicable taxes and penalties if the funds were used for other non-medical purposes
- Enables employees to report their withdrawals accurately while filing income tax returns
Who issues Form 1099-SA?
Form 1099-SA is issued by the entity managing your medical accounts, including banks, financial institutions, HSA providers, medical insurance providers, or third-party benefits administrators. These organizations report distributions from HSAs, Archer MSAs, and MA MSAs to the IRS. Employees withdrawing money receive a copy to include in their tax filing.
When do employees receive Form 1099-SA?
Form 1099-SA is issued to employees by January 31 every year. The form is sent through email, an online portal, or physical mail by the service provider, depending on the employee's communication preference. Employees who withdrew money from their accounts can expect to receive the form.
What is the difference between Form 1099 and Form 1099-SA?
Individuals use Form 1099 to report all income beyond their stipulated salary, wages, or other compensation from their employer. This can include freelance payments, income from savings, rental income, and retirement distributions. Form 1099-SA, on the other hand, is a specific type of 1099 form used exclusively to report withdrawals made from medical savings accounts. While most 1099 forms report taxable income, 1099-SA withdrawals are tax-free if used for qualified medical expenses.
What information is included in Form 1099-SA?
Form 1099-SA has all the key information regarding employee withdrawals from their medical savings accounts. Each box on the form represents a specific piece of information required by the IRS. The form usually reports the following information:
- Total amount withdrawn from the account
- Earnings on excess contributions
- The type of withdrawal that was made
- Account balance (only if applicable)
- The type of account, such as HSA, Archer MSA, or MA MSA
- Information about the account holder and provider