HSA Tax Reporting

Employer Clients - Tax Reporting:

Employers need to report employer contributions to your employee's HSA account on Form W-2 Box 12, Code W.

Employee / Individual Clients:

2010 HSA Statement, checking/savings account statement, may be used in preparing your tax returns for 2010. If you plan to add to your HSA account for the 2010 tax year (you are allowed to do so until April 15, 2011), then you will need to add those contributions to what is listed on your checking/savings account statement when you prepare your tax return.

Form 8889:

When you file your taxes, submit form 8889, which may be obtained from the IRS Website or your tax preparer.

Form 1099-SA:

At the end of the year, form 1099-SA, was mailed to you. For many, a form 1099 is associated with taxable income. That is not the case with HSA's. Form 1099-SA simply tells the IRS what amounts were spent from your HSA Account.

2010 Contributions:

In case you are planning to maximize your tax-deductible contribution for 2010, please remember that you and your employer may contribute in aggregate up to $3,050 if you are under 55 years of age and have single HSA compatible health coverage, and up to $6,150 if you are under 55 years of age and have family HSA compatible health coverage. If you are 55 years old and over and not receiving Medicare benefits, then you may also contribute an additional "catch up" contribution of $1,000. Your spouse is also entitled to a catch up contribution if he/she meets the eligibility requirements noted above.
Take Note: the IRS requires a separate HSA account for your spouse's catch up contribution.

Problem with excess Contributions:

Please compare your year-end statement against contributions limits. If you contributed in excess, let your HSA administrator know so they can correct the problem. If you fail to do so, the IRS will levy excess contribution penalties.

Form 5498-SA:

In late May Form 5498-SA will be mailed to you. This form will report contributions made to your account for the 2010 tax year. It is for your records only and not a required tax filing form. The IRS requires that it not be mailed until you have had every opportunity to contribute to your HSA accounts for 2010. Remember that HSA contributions for 2010 can be made as late as April 15, 2011.

Tax Issues - California:

While HSA's enjoy federal tax advantages, please remember your contributions are not tax-advantaged for State income tax purposes. That means for residents in California, contributions are not tax-deductible, employer contributions are considered taxable income, and any interest earned is considered income for state tax purposes.

2011 Contributions:

The IRS has kept the maximum allowable contributions in 2011 at the same level as 2010. For accountholders with single coverage and under age 55, the contribution maximum is $3,050. For accountholders with family coverage and under age 55, the maximum limit is $6,150. The "catch-up" contributions for each eligible individual 55 years and older is $1,000.

Note:

BayCrest Insurance Services is only presenting helpful information; we are not tax advisors. Any questions on the HSA regulations & filings should be asked of your Tax Advisor.

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