What IRS Form 1099-SA (2015) Is For
IRS Form 1099-SA reports distributions from an HSA, an Archer MSA, or a Medicare Advantage MSA for the 2015 tax year. It shows each gross distribution and lists Form 1099-SA distributions by type and code. This record helps the IRS verify whether account funds paid qualified medical expenses or nonqualified expenses.
Form 1099-SA separates qualified medical amounts from taxable MSA distributions that may increase income tax. It can also report Archer MSA contributions returned and activity tied to an MSA account. For a Medicare Advantage MSA, the form reports withdrawals that paid medical providers or reimbursed qualified treatment costs.
Additional guidance appears in Information Returns and Reporting Forms, which provides resources for reporting forms.
When You’d Use IRS Form 1099-SA (2015)
Taxpayers use Form 1099-SA for 2015 when a Health Savings Account (HSA), an Archer Medical Savings Account, or a Medicare Advantage MSA issues a distribution. The form supports tax return reporting by linking normal distributions to healthcare expenses and other withdrawals. It also shows when the code applies if amounts shift into nonmedical expenses and affect taxable income.
Account holders report Form 1099-SA details when withdrawals cover eligible care and preserve tax benefits. The form helps document payments to providers and supports a tax deduction when records show qualified expenses. It also confirms whether HSA contributions and related savings accounts activity support tax-deductible treatment under IRS rules.
Key Rules or Details for 2015
The 2015 rules cover excess contributions, nonqualified expenses, and added taxes for HSA and Archer MSA distributions. Nonmedical expenses increase gross income and may trigger an additional tax on the return. The IRS reviews reporting to confirm whether withdrawals qualify as tax-free distributions under published guidance.
These rules apply to prescription drugs, medical care costs, and employer funding tied to a high-deductible health plan. Taxpayers who receive distributions must meet qualified expense standards for an Archer MSA or a Medicare Advantage MSA. Estate reporting for an MSA uses fair market value after the account holder’s death.
Step-by-Step (High Level)
Step 1: The taxpayer obtains Form 1099-SA from the trustee and reviews the distribution code, account number, and total distribution.
Step 2: The taxpayer verifies which amounts covered medical treatment, medical expenses, or direct payments to a medical service provider.
Step 3: The taxpayer gathers receipts for all qualified medical expenses and compares those totals with the amounts reported on the form.
Step 4: The taxpayer completes Form 8889 and any related tax forms and confirms that each expense appears accurately on the documents.
Step 5: The taxpayer attaches the completed forms to the tax return and confirms that all entries match the available receipts and records.
Step 6: The taxpayer stores the documentation securely and retains copies for potential audit review in future tax years.
Additional guidance on filing steps can be found in the IRS Form Help Center.
Common Mistakes and How to Avoid Them
IRS reviews can identify delays when Form 1099-SA details do not align with attached schedules. Filing records revealed frequent inconsistencies involving distribution reporting, missing forms, and incomplete documentation. A preparer can identify common reporting issues and document corrections before filing. A filer can correct discrepancies to support accurate reporting and reduce follow-up questions.
- Omitted Form 8889: Some filers omit Form 8889 while reporting HSA distributions, and the return may require Form 8889 for complete reporting.
- Incorrect Distribution Codes: Filers entered wrong codes that misidentified the type of distribution, and each filer needed to confirm the code shown on Form 1099-SA.
- Mismatched Reported Amounts: Reported totals did not match Form 1099-SA figures, and each filer needed to reconcile every entry before filing.
- Unreported Excess Contributions: Excess HSA or Archer MSA contributions remained unreported, and each filer needed to disclose these amounts to meet IRS requirements.
What Happens After You File
The IRS reviews each tax return and compares the information you report with data submitted by your HSA trustee. This includes verifying fair market value, distributions, and employer contributions for HSAs, Archer MSAs, and Medicare Advantage MSAs. Accurate reporting helps the IRS confirm which amounts are tax-free and identify any non-qualified expenses that may need to be added to taxable income.
If your return doesn’t match the records reported to the IRS for an MSA, the agency may follow up with you. Their review can include after-tax contributions, qualified medical expenses, and any returned Archer MSA contributions to ensure the correct taxable amount. Taxpayers should keep documentation for itemized deductions and for payments made to an account beneficiary or surviving spouse.
FAQs
How does an account holder report distributions from an HSA or Archer MSA on tax forms?
The account holder reports distributions on Form 8889 and compares each entry with the information shown on Form 1099-SA. The filer confirms whether the amounts supported qualified medical expenses for the tax year. The filer attaches the completed schedules to the account holder’s tax return.
What counts as a qualified medical expense when evaluating healthcare costs for 2015?
Qualified medical expenses include payments for medical treatment, prescription drugs, and other services permitted under Internal Revenue Service rules. The Internal Revenue Service lists eligible categories in Publication 502. The filer reviews the categories carefully before completing the return.
How does a Medicare Advantage MSA compare to an HSA or Archer MSA during reporting?
A Medicare Advantage MSA uses similar reporting rules for qualified medical expenses. The filer verifies that the distribution paid eligible costs and did not cover personal spending. A non-qualified withdrawal becomes taxable when entered on the return.
How does the distribution code influence the fair market value and taxable income reported on the return?
The distribution code identifies the type of withdrawal listed on Form 1099-SA. The filer evaluates the code to determine whether the amount qualifies as a tax-free distribution. A code for non-qualified spending increases taxable income.
What happens when an entry does not match total contributions or HSA funds recorded for the year?
A mismatch can indicate that money left in the account or total contributions were reported incorrectly. The filer reconciles the accounts with bank account records before filing. The filer corrects all figures to support accuracy for tax-advantaged accounts and prevent review issues.
