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If you’re the recipient of a health savings account or HSA, then the IRS would require you to submit Form 8889 together with your tax return before you are allowed to deduct your assistances to the account. The purpose of this form is to report the deductible contributions, estimate the deduction, report the distributions that you take in paying medical expenses, and to calculate the tax you have to pay on withdrawals you make for non-medical related reasons.
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Key Features
Step 1:Find and download the latest version of Form 8889. It is going to be included in your Form 1040 book or you can download it from the Internal Revenue Service's website. Import the form on Wondershare PDFelement.
Step 2: Before filling out Form 8889, you have to indicate whether you had an individual or family high-deductible health plan for the year. If you didn’t have a high-deductible health plan for the entire year, then you have to refer to the instructions to define how much of a tax deduction applies. If there are extra contributions made into your account, they have to be withdrawn from the account before you file your tax return, or they’ll be subject to a 10% excise tax.
Step 3: Complete Part I. the Fill out the lines 1 through 13 of the form as instructed on the form. But if both of you and your spouse are filing together, it means that both of you are qualified individuals and either of you have an HDHP with family coverage, both of you are treated to have the family coverage plan. Self-only coverage plan is not going to be suitable for you.
Each spouse has too complete a separate Form 8889. On Line 13 of both Forms 8889, the amounts have to be combined and then enter the same amount on the line 25 of Form 1040; or on the Line 25 of Form 1040NR. Don’t forget to submit both Forms 8889 together with the paper tax return.
Step 4: Complete HSA Distributions on Part II. This part is used by the taxpayers in reporting distributions from the HSA. Taxpayers get tax-free distributions from an HSA to make them pay or reimburse for qualified medical costs. The taxpayer is going to make to tell you the types of costs reimbursed or paid with the distribution.
Step 5: Complete Income and Additional Tax on Part III. This part defines if any penalties or taxes apply to amounts added when an account holder isn’t qualified to contribute. Remember that HSA eligibility is only effective when contributions could be made to an HSA, instead of when money in the HSA could be spent. The fund in the HSA is useful for the account’s lifetime, in spite of the status of the insurance.
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