Instructions for Form 8889 Checklist – 2014 Tax Year
Form 8889 reports health savings account contributions, distributions, and overall account
activity for the 2014 tax year. You must file this form if you or your employer made HSA contributions during 2014, if you received distributions from your account, or if you became ineligible during a testing period.
The form calculates your allowable deduction, determines taxable distributions, and identifies excess contributions subject to penalty. The completed form serves as the primary record of all
HSA activity for the tax year.
Verifying Eligibility and Coverage Under a High
Deductible Health Plan
You must confirm coverage under a qualifying high-deductible health plan for each month of
2014 before making HSA contributions. The HDHP must meet minimum annual deductible requirements of $1,250 for self-only coverage or $2,500 for family coverage, and maximum out-of-pocket expenses cannot exceed $6,250 for self-only plans or $12,500 for family plans.
Lines 1 through 3 of Form 8889 require month-by-month verification of your HDHP coverage status. Enter the number of months you maintained eligible coverage on line 1, then calculate your contribution limit using the 2014 inflation-adjusted amounts and the coverage months you report.
Employer Contributions and Annual Contribution Limits
Report all employer contributions deposited directly to your HSA on line 4 of Form 8889. Include amounts your employer contributed through a cafeteria plan under Section 125 of the Internal
Revenue Code.
For 2014, the annual contribution limit is $3,300 for self-only coverage and $6,550 for family coverage under a high-deductible health plan. Individuals age 55 or older by the end of the tax year can make an additional $1,000 catch-up contribution. These limits apply to combined contributions from all sources, including amounts you deposit yourself and amounts your employer contributes on your behalf. Your contribution determination must align with the HDHP plan document and your actual enrollment status throughout the year.
Excess employer contributions that exceed the annual limit must be withdrawn by your tax return due date, including extensions, to avoid tax consequences. If you do not cancel the excess by this deadline, you must report the amount as other income on your tax return and pay a 6% excise tax on excess contributions reported on Form 5329.
Personal Contributions and Excess Contribution
Treatment
On line 5, report your direct HSA contributions made during 2014, excluding employer contributions already reported on line 4. You may include contributions made after December
31, 2014, but before the tax filing deadline of April 15, 2015, if you designate them in writing as
2014 contributions.
Line 6 calculates the maximum allowable contribution based on your coverage months and the applicable 2014 annual limit for your coverage type. If your contributions exceed this limit, the excess is subject to a 6% excise tax unless you withdraw the excess amount along with any earnings by your tax return due date, including extensions. The 6% excise tax applies annually for each year the excess remains in your account. You must report this tax on Form 5329, part
II.
Distributions, Qualified Medical Expenses, and Penalty
Assessment
You must report all distributions from your health savings account on line 7, including amounts you used for qualified medical expenses and amounts you withdrew for other purposes. If your account trustee issued Form 1099-SA, use the distribution amount shown in box 1 and attach the form to your tax return.
Qualified medical expenses include amounts paid for medical care as defined in IRC Section
213(d), excluding insurance premiums, cosmetic procedures not related to injury or disease, and non-prescribed vitamins. You must maintain receipts, invoices, and provider statements documenting each qualified expense.
Non-qualified distributions appear on line 11 after subtracting qualified expenses from total distributions. These amounts are includable in gross income and subject to an additional 20% tax if you were under age 65 and not disabled when you took the distribution. You must report
the 20% additional tax on Form 5329. Part II does not apply to distributions made after you turn
65, become disabled, or die.
Medicare Enrollment and HSA Contribution Eligibility
Once you enroll in Medicare Part A or Part B, you cannot contribute to a health savings account for any month you have Medicare coverage. Medicare Part A enrollment can be retroactive up to six months from the date you apply, making contributions during those retroactive months excess contributions subject to the 6% excise tax.
Distributions for qualified medical expenses remain tax-free regardless of your age or Medicare enrollment status. The 20% additional tax applies based on your age and disability status, not your Medicare enrollment.
Required Forms and Documentation
You must attach Form 8889 to Form 1040 or Form 1040-NR when you file your federal income tax return. If you have excess contributions or non-qualified distributions subject to the 20% penalty, you must also file Form 5329, part II.
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