Form 1099-SA Checklist: 2014 Tax Year
HSA, Archer MSA, and Medicare Advantage MSA Distributions
Purpose
Form 1099-SA reports distributions made during the 2014 calendar year from Health Savings Accounts (HSAs), Archer Medical Savings Accounts (Archer MSAs), and Medicare Advantage Medical Savings Accounts (MA MSAs). Trustees and payers must furnish Copy B to recipients and file Copy A with the Internal Revenue Service to ensure proper tax reporting of medical savings account distributions.
For 2014, Copy B must be furnished to recipients by February 2, 2015, and Copy A must be filed with the IRS by March 2, 2015, for paper filing or March 31, 2015, if filing electronically. Because paper forms are scanned during IRS processing, forms downloaded and printed from the IRS website cannot be filed with the IRS. Only official red-ink forms or IRS-approved electronic filing methods that meet Publication 1220 specifications are acceptable.
Filing Steps for 2014
1. Identify Account Type (Box 5)
Check the appropriate box to indicate whether the distribution originated from an HSA, Archer MSA, or Medicare Advantage MSA. Account type determines rollover eligibility and reporting requirements.
- HSA: May roll over only to another HSA
- Archer MSA: May roll over to another Archer MSA or to an HSA
- Medicare Advantage MSA: Generally cannot be rolled over and follows Medicare-specific rules
2. Enter Federal Identification Numbers
Report the trustee or payer’s federal identification number and the recipient’s identification number (SSN, ITIN, ATIN, or EIN) in the designated fields. Copy B may display only the last four digits of the recipient’s identification number for privacy protection, but Copy A filed with the IRS must contain the full number. Accurate identification numbers are required for IRS matching and verification.
3. Report Gross Distribution Amount (Box 1)
Enter the total amount distributed during calendar year 2014. This includes distributions paid directly to medical service providers and amounts paid directly to the account holder or beneficiary. Do not reduce this amount for qualified medical expenses, and do not report negative amounts. The trustee does not determine the taxable portion; recipients make that determination on their tax return.
4. Report Earnings on Excess Contributions (Box 2)
If excess contributions plus earnings were withdrawn by the due date of the 2014 income tax return (generally April 15, 2015), report the earnings portion in Box 2. This amount must also be included in Box 1. Earnings on excess contributions are taxable income even if used for qualified medical expenses.
5. Select Distribution Code (Box 3)
Enter the appropriate distribution code for 2014:
- Code 1 – Normal distribution
- Code 2 – Excess contributions withdrawn
- Code 3 – Disability distribution
- Code 4 – Death distribution other than Code 6
- Code 5 – Prohibited transaction
- Code 6 – Death distribution after year of death to nonspouse beneficiary
Only one distribution code is permitted per Form 1099-SA.
6. Complete Fair Market Value on Date of Death (Box 4)
Complete Box 4 only if the account holder died in 2014 or a prior year. Report the fair market value of the account as of the original date of death, not the distribution date. For HSAs, reduce the reported amount of qualified medical expenses of the decedent paid within one year after death, if applicable.
7. Furnish Copy B to Recipients
Provide Copy B to recipients by February 2, 2015. Timely furnishing is required even if an extension is requested for IRS filing. Recipients need this information to complete Form 1040, Form 1040NR, Form 8889 (HSAs), or Form 8853 (Archer MSAs and MA MSAs).
8. Prepare and File Form 1096 Transmittal
Prepare Form 1096 using 2014 specifications when filing on paper. Attach all Copy A forms and file with the IRS by March 2, 2015. Electronic filers must submit forms by March 31, 2015, using IRS-approved software that meets Publication 1220 requirements.
2014 Year-Specific Rules
Spouse Beneficiary Treatment
When the account holder dies, and the surviving spouse is the designated beneficiary, the spouse is treated as the account holder for HSAs and Archer MSAs, with no immediate income inclusion. A Medicare Advantage MSA inherited by a spouse is treated as an Archer MSA of the spouse for distribution purposes, though no new contributions may be made. This treatment applies uniformly under the 2014 rules.
Nonspouse Beneficiary Reporting Requirements
For nonspouse beneficiaries, the fair market value of the account on the date of death must be reported as income on the beneficiary’s tax return for the year the account holder died, regardless of when distributions occur. If the account holder died in 2013 and distributions were made in 2014, the beneficiary reports the income on their 2013 return. Earnings after the date of death are reported as taxable income in the year received.
Excess Contributions and Excise Tax
Excess contributions remaining in an HSA or Archer MSA after the tax return due date are subject to a 6% annual excise tax. The excise tax is calculated on Form 5329 and applies for each year the excess remains in the account until corrected.
Account Number Box Guidance
The account number box may contain any unique identifier assigned by the payer. This field is optional for single-account recipients but required when multiple Forms 1099-SA are issued to the same recipient. The account number does not affect filing validity or IRS matching.
Final Note
Recipients should retain Form 1099-SA with their tax records and consult Form 8889, Form 8853, and Publication 969 when preparing their 2014 tax return. Distributions used for qualified medical expenses are generally tax-free, while nonqualified distributions may be subject to income tax and additional penalties.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
