Form 8889: Health Savings Accounts (HSAs) – Your 2025 Tax Guide
Whether you're contributing to an HSA for the first time or are a seasoned participant, understanding Form 8889 is essential for maximizing your tax benefits and avoiding costly mistakes. This guide walks you through everything you need to know about reporting your Health Savings Account on your 2025 tax return.
What the Form Is For
Form 8889 is the tax form you'll use to report all activity related to your Health Savings Account. Think of it as the official record that connects your HSA to the IRS. You'll use this form to accomplish four key things: reporting contributions made to your HSA (whether from your paycheck, your employer, or deposits you made yourself), calculating your HSA tax deduction, reporting any money you withdrew from the account, and figuring out whether you owe any additional taxes or penalties.
The beauty of an HSA lies in its triple tax advantage—contributions reduce your taxable income, the money grows tax-free, and withdrawals for qualified medical expenses aren't taxed. Form 8889 is how you claim these benefits. It attaches to your main tax return (Form 1040, 1040-SR, or 1040-NR) and provides the IRS with a complete picture of your HSA transactions for the year. IRS.gov
When You'd Use It (Late or Amended Filing)
Most people file Form 8889 with their regular tax return by the standard April 15 deadline. However, life doesn't always follow the calendar, and there are several situations where you might need to file late or submit an amended return.
If you missed the original deadline and received an extension, you can still make HSA contributions for 2025 up until your extended deadline and report them on Form 8889. You're also allowed to make contributions for the 2025 tax year all the way up until April 15, 2026 (the standard tax-filing deadline for 2025 returns).
You might need to file an amended Form 8889 if you discover you made excess contributions and need to correct them, if you received a corrected Form 5498-SA from your HSA trustee showing different contribution amounts than you originally reported, if you incorrectly calculated your contribution limit (perhaps you didn't account for a mid-year change in coverage), or if you need to add distributions you forgot to report initially. The IRS provides special relief for excess contributions—you can withdraw them (plus any earnings) up to six months after the tax deadline (excluding extensions) if you've already filed your return, though you'll need to file an amended return to reflect the correction. IRS Publication 969
Key Rules for 2025
Understanding the eligibility requirements and contribution limits is crucial for staying compliant and maximizing your HSA benefits.
Eligibility Requirements: To contribute to an HSA in 2025, you must be covered by a qualifying High Deductible Health Plan (HDHP) on the first day of the month, have no other health coverage (with certain exceptions like dental, vision, and specific disease insurance), not be enrolled in Medicare, and not be claimed as a dependent on someone else's tax return. For 2025, an HDHP must have a minimum deductible of $1,650 for self-only coverage or $3,300 for family coverage, with maximum out-of-pocket expenses capped at $8,300 (self-only) or $16,600 (family). IRS Revenue Procedure 2024-25
Contribution Limits: The 2025 contribution limits are $4,300 for individuals with self-only coverage and $8,550 for those with family coverage. If you're age 55 or older by December 31, 2025, you can contribute an additional $1,000 as a ""catch-up"" contribution. These limits include all contributions—yours, your employer's, and anyone else's made on your behalf.
The Last-Month Rule: This is a valuable provision that allows you to contribute the full annual amount even if you didn't have HDHP coverage for the entire year. If you're an eligible individual on December 1, 2025, you're considered eligible for the full year and can contribute the maximum amount. However, there's a critical catch: you must remain an eligible individual through the entire ""testing period""—December 1, 2025, through December 31, 2026. If you fail this requirement (except due to death or disability), you'll owe income tax plus a 10% penalty on contributions that wouldn't have been allowed without the last-month rule. IRS Form 8889 Instructions
Qualified Medical Expenses: HSA funds can be used tax-free for a wide range of medical expenses including deductibles and copayments, prescription medications, dental and vision care, medical equipment, and certain insurance premiums (like COBRA, Medicare, and long-term care insurance, but not Medicare supplement policies). The expense must be incurred after you establish the HSA—you can't reimburse yourself for medical bills from before you opened the account.
Step-by-Step Filing Process (High Level)
Filing Form 8889 follows a logical three-part structure that mirrors the life cycle of your HSA dollars: money in, money out, and tax calculations.
Part I – HSA Contributions and Deductions
Start by entering your type of HDHP coverage on the first day of the last month of your tax year. Report the total contributions made to your HSA during 2025 (you'll find this on Form 5498-SA from your HSA trustee, typically received in January or February 2026). Calculate your contribution limit based on your coverage type, age, and months of eligibility—the form includes a worksheet to help with this calculation. Finally, figure your deduction by taking the lesser of your actual contributions or your contribution limit, then subtracting any employer contributions (which are already excluded from your income).
Part II – HSA Distributions
Report the total distributions you took from your HSA in 2025 (shown on Form 1099-SA from your trustee). Enter the amount you used for qualified medical expenses. Calculate any distributions that must be included in your taxable income—this is generally the amount you withdrew for non-medical purposes.
Part III – Income and Additional Tax
If you have distributions that weren't used for qualified medical expenses, you'll generally owe regular income tax on that amount plus an additional 20% tax penalty. The 20% penalty doesn't apply if you're over age 65, disabled, or the distribution was made after death. You'll also use this section to calculate the 6% excise tax on excess contributions and the 10% penalty if you failed the testing period for the last-month rule. IRS Form 8889 Instructions
Important: If you and your spouse both have HSAs, you must each file a separate Form 8889, even if you file a joint tax return. Attach both forms to your return.
Common Mistakes and How to Avoid Them
Even careful taxpayers frequently stumble on these Form 8889 pitfalls:
Mistake #1 – Overcontributing
Many people don't realize that employer contributions count toward the annual limit. If your employer contributes $2,000 and you contribute $4,300 for self-only coverage in 2025, you've exceeded the limit by $2,000. Solution: Track employer contributions throughout the year (they're shown on your W-2 in Box 12 with code W) and adjust your personal contributions accordingly.
Mistake #2 – Including Rollovers and Employer Contributions in Line 2
When completing line 2 of Form 8889, you should only report your personal contributions and contributions made by others on your behalf, not employer contributions or amounts rolled over from another HSA or Archer MSA. These amounts get reported elsewhere on the form.
Mistake #3 – Contributing While Enrolled in Medicare
Once you enroll in Medicare, you can no longer contribute to an HSA (though you can still use existing funds). The tricky part is that Medicare coverage can be retroactive—if you enroll after age 65, your coverage typically starts six months earlier (or the month you turned 65, whichever is shorter). If you contributed during those retroactive months, those are excess contributions subject to penalties.
Mistake #4 – Using HSA Funds for Non-Qualified Expenses
If you're under 65 and use HSA money for a vacation or to pay credit card bills, you'll owe income tax on that withdrawal plus a 20% penalty. Keep detailed records and receipts for all medical expenses. After age 65, you can withdraw HSA funds for any reason and only pay regular income tax (no penalty), though using them for qualified medical expenses remains tax-free.
Mistake #5 – Not Keeping Records
The IRS doesn't require you to submit receipts with Form 8889, but you must keep documentation for your records. If audited, you'll need to prove your distributions went toward qualified medical expenses. Maintain receipts, explanation of benefits statements, and detailed records for at least three years.
Mistake #6 – Reimbursing Pre-HSA Expenses
You can only use HSA funds tax-free for expenses incurred after you established the account. Medical bills from before your HSA start date aren't qualified expenses, even if you didn't pay them until after opening the account. IRS Form 8889 Instructions
What Happens After You File
Once you've filed Form 8889 with your tax return, several things occur automatically in the tax system. The HSA deduction from line 13 of Form 8889 gets transferred to Schedule 1 (Form 1040), reducing your adjusted gross income. Any taxable distributions flow to your Form 1040, increasing your taxable income, and any penalties or additional taxes are added to your total tax liability.
Your HSA trustee will send Form 5498-SA to the IRS (and you) by May 31, 2026, reporting your total 2025 contributions. The IRS uses this to verify the information on your Form 8889. If there are discrepancies, you may receive a notice requesting clarification or correction. Don't ignore IRS notices—they typically provide options for responding and resolving issues before they escalate into penalties.
Your HSA account itself remains open and the funds continue to belong to you, growing tax-free. Unlike Flexible Spending Accounts (FSAs), HSA funds never expire and they're portable—they stay with you even if you change jobs, change insurance, or retire. After age 65, your HSA essentially becomes like a traditional IRA with an added bonus: withdrawals for medical expenses remain completely tax-free.
If you made excess contributions, you have options to correct them. Withdraw the excess (plus any earnings attributable to it) by the tax filing deadline (including extensions) and the excess won't be taxed, though the earnings will be. If you miss that deadline, you can still withdraw the excess within six months after the due date and file an amended return. Otherwise, excess contributions that remain in your account are subject to a 6% excise tax for each year they remain. IRS Publication 969
Frequently Asked Questions
Can I contribute to an HSA if my spouse has a non-HDHP health plan?
Yes, as long as your spouse's plan doesn't cover you. You remain an eligible individual and can contribute based on your own HDHP coverage type. Each spouse must have a separate HSA—joint HSAs don't exist.
What happens to my HSA contribution limit if I switch from self-only to family coverage mid-year?
Your contribution limit is calculated based on the number of months you had each type of coverage. However, the last-month rule can help: if you have family coverage on December 1, you can contribute the full family amount ($8,550 for 2025) as long as you remain eligible through the testing period ending December 31, 2026.
Do I need to file Form 8889 if I only made contributions but took no distributions?
Yes. You must file Form 8889 whenever you (or anyone else, including your employer) made contributions to your HSA during the tax year. This is how you claim your tax deduction.
Can I use my HSA to pay health insurance premiums?
Generally no, but there are important exceptions: COBRA continuation coverage premiums, health insurance premiums while receiving unemployment compensation, Medicare premiums (but not Medigap), and qualified long-term care insurance premiums. Regular health insurance premiums for employer-sponsored or marketplace plans are not qualified expenses.
What if I contributed to my HSA but then realized I wasn't eligible for the entire year?
You likely made excess contributions. Calculate the amount that should have been contributed based on your actual eligible months. Withdraw the excess plus earnings before the tax deadline to avoid penalties, or report them as excess contributions on Form 8889 and pay the 6% excise tax.
Are over-the-counter medications qualified medical expenses?
Yes. The CARES Act (2020) permanently changed the rules to allow HSAs to pay for over-the-counter medications and menstrual care products without a prescription. This includes pain relievers, cold medicine, allergy medications, and similar items.
If I turn 65 and enroll in Medicare, what happens to my HSA?
You can no longer contribute to your HSA once Medicare coverage begins (even if you continue working and have HDHP coverage). However, your existing HSA funds remain available to use tax-free for qualified medical expenses, including Medicare premiums. The 20% penalty for non-medical withdrawals no longer applies once you're 65.
Sources: All information in this guide comes from official IRS publications: Form 8889 Instructions (2025 Draft), IRS Publication 969, IRS Revenue Procedure 2024-25, and About Form 8889.
Disclaimer: This guide provides general information for educational purposes. Tax situations vary, and you should consult a qualified tax professional or refer to official IRS publications for advice specific to your circumstances.
