What IRS Form 1099-SA (2010) Is For
IRS Form 1099-SA reports distributions from a Health Savings Account (HSA) or a Medical Savings Account for the 2010 tax year. It includes details for Archer Medical Savings Accounts (Archer MSA) and Medicare Advantage Medical Savings Accounts (Medicare Advantage MSA).
You can use the form to evaluate reported distributions for federal tax purposes and determine whether a distribution is non-taxable for the year. By reviewing the amounts reported, you can identify distributions that may increase your gross income or reduce a possible tax deduction.
You can compare the reported figures to your records to confirm the correct tax treatment for each amount. If you track each HSA balance carefully or manage employee HSAs, you can also use the form to support that recordkeeping.
When You’d Use IRS Form 1099-SA (2010)
During the 2010 tax year, you use IRS Form 1099-SA when you receive distributions from a Health Savings Account (HSA) or Medical Savings Account. It applies when you withdraw funds to pay qualified medical expenses or when you use funds for nonmedical purposes that affect taxable income.
Form 8889 or Form 8853 reporting also relies on the amounts and codes shown on Form 1099-SA. By comparing the reported distributions to your account records, you can confirm the figures you report on your return. For employee HSAs or year-end account reviews, the form supports reconciliation between custodian reports and your tax records.
Key Rules or Details for 2010
You receive tax-free distributions from your Health Savings Account (HSA) when you pay qualified medical expenses incurred after the account start date. Under the same timing rules, your existing HSA can reimburse medical expenses that meet requirements under federal or state law after the account is established.
When you use funds for nonmedical care costs, you report a taxable distribution, pay ordinary income tax, and may owe an additional tax. For 2010, you should review excess contribution rules when a Health Reimbursement Arrangement or other employee health plan affects your account, because those rules may limit itemized deductions.
Step-by-Step (High Level)
- Step 1: The review process begins with a careful examination of Form 1099-SA for accuracy. A reviewer confirms the HSA holder's name, account type, and the distributions reported on Form 1099-SA. You compare each amount and distribution code to the annual distributions recorded in your account records.
- Step 2: The process requires organized receipts for medical services and other expenses incurred during the tax year. Each receipt is matched to its related distribution to ensure the payment qualifies for tax-free treatment. A reviewer confirms that each payment from the HSA relates to qualified medical expenses and supports accurate HSA balance records.
- Step 3: The filing stage includes completion of Form 8889 or Form 8853 to report distributions accurately. The preparer enters taxable amounts and each required HSA contribution on the appropriate lines. The taxable figures are carried onto the income tax return for further review.
Common Mistakes and How to Avoid Them
You experience filing delays when specific, preventable errors appear on IRS Form 1099-SA submissions. Identifying and correcting these mistakes allows you to maintain compliance and support accurate processing of HSA and MSA distributions.
- Incomplete Forms: This mistake occurs when required fields, including distribution amounts or account type indicators, remain blank on Form 1099-SA. You must review every field and confirm that all required entries are completed before submission.
- Incorrect Identification Numbers: This mistake occurs when Social Security numbers or account numbers do not match records maintained by the HSA or MSA custodian. You must compare the form with official account statements and correct all identifiers before filing.
- Wrong Distribution Codes: This mistake occurs when the selected distribution code does not reflect the actual purpose of the withdrawal. You must follow the Form 1099-SA instructions and assign the code that matches each reported transaction.
- Missing Supporting Documentation: This mistake occurs when required statements or related forms are not included with the submission. You must assemble and attach all required documents before submission.
- Uncorrected Reporting Errors: This mistake occurs when known errors remain unresolved after Form 1099-SA is issued. You must request and file a corrected Form 1099-SA promptly.
What Happens After You File
The Internal Revenue Service reviews your HSA distributions against account records to confirm accuracy and ensure compliance with Internal Revenue Code requirements for tax advantages. During this review, the agency checks reports for Health Savings Account (HSA) activities, including Archer MSA reporting and payments related to medical expenses.
The agency also examines whether you followed high-deductible health plan rules, including the same HDHP coverage, family coverage details, and eligibility requirements that affected reimbursements properly. It checks the timing of the testing period, the application of the last month rule, and other health coverage factors that influence qualification for HSA-based distributions involving family members.
For more federal form options, visit the Federal Fillable Tax Forms section.
FAQs
How should you address an incorrect Form 1099-SA distribution entry?
A filer should contact the account administrator and request a corrected form. A corrected form ensures that Form 1099-SA distributions match account records. The administrator provides the updated document for accurate filing.
Can funds from an HSA pay medical expenses for family members or domestic partners?
A filer may reimburse medical expenses for eligible family members when rules permit reimbursement. State law may guide situations in which domestic partners qualify for coverage. The filer should review plan documents before applying reimbursement rules.
What steps apply when receipts for qualified medical expenses cannot be located?
A filer should request replacement statements from medical providers. Providers can supply alternate records that support distributions from an HSA. These records help the filer respond to reviews conducted by the Internal Revenue Service.
How can a mistaken distribution from an Archer MSA or Medicare Advantage account be corrected?
A filer should contact the administrator and request instructions for repayment procedures. Administrators provide approved steps for correcting distributions from an Archer MSA or Medicare Advantage account. The filer should retain proof of the completed correction.
How do taxable distributions affect federal income reporting when a qualifying child is present?
A taxable distribution increases gross income for the year. The filer should record the taxable amount on the federal income tax return. The presence of a qualifying child does not change the classification of taxable entries.
For added support with HSA and MSA reporting, visit our IRS Form Help Center.
