Form 8889 Guide: Reporting HSA Distributions for 2024 Filing

portions for the 2024 tax year. The form must accompany Schedule 1 when you file a Form

1040 to report HSA-related income adjustments and reconciliation.

Verify HSA Account Eligibility and Contribution Status

To qualify as an eligible individual, you must confirm that you maintained a qualifying high-deductible health plan for at least one month during 2024. Check whether you received employer contributions, made personal contributions, or rolled over funds from another HSA during the year.

Review your HSA custodian statement to identify the exact year-end account balance and all distributions taken in 2024. Your custodian should provide Form 1099-SA showing all distributions and Form 5498-SA showing all contributions made to your tax-advantaged account.

Calculate Qualified Medical Expenses Paid from HSA

Distributions

List all distributions taken in 2024 and match them to qualified medical expenses incurred in the same year. These expenses include deductible medical care under Internal Revenue Code

Section 223(d)(2) but exclude costs paid or reimbursed by insurance or other sources.

Keep receipts and invoices separate from non-qualified expense documentation to avoid claiming ineligible costs. You don't need to submit receipts with your tax return, but keep them in case of an IRS audit.

Report Total HSA Distributions on Part II

Enter the total amount of distributions received from your HSA during 2024 on Form 8889, Part

II, Line 14a. This figure comes from Box 1 of Form 1099-SA issued by your HSA custodian before the filing deadline.

Include all distributions regardless of whether they were used for qualified or non-qualified expenses. If you rolled over any amounts to another HSA or withdrew excess contributions by

the filing deadline, report those amounts on Line 14b. Subtract Line 14b from Line 14a and enter the result on Line 14c to calculate your net distributions for the year.

Enter Qualified Medical Expenses on Line 15

Report the total qualified medical expenses paid directly from HSA funds during 2024 on Line

15. This amount cannot exceed the total distributions reported on Line 14c after accounting for rollovers and excess contribution removals.

For 2024, qualified expenses must satisfy the definition under Internal Revenue Code Section

223(d)(2). The following rules apply to health insurance premiums

• Medicare premiums qualify as medical expenses only if you (the account beneficiary) are

age 65 or older when the premiums are paid.

• If you are under age 65, Medicare premiums for your spouse or dependents who are

age 65 or older are generally unqualified medical expenses.

• COBRA continuation coverage premiums qualify as medical expenses regardless of

age.

• Long-term care insurance premiums qualify as medical expenses subject to age-based

limits.

• Routine health insurance premiums remain excluded except for the specific exceptions

listed above.

Qualified medical expenses also include dental care, vision care, and menstrual care products purchased during 2024. You can use HSA distributions to pay for these expenses tax-free if you were an eligible individual when you incurred the costs.

Calculate Taxable Distributions and Additional Tax

Subtract the qualified medical expenses on Line 15 from distributions after rollovers on Line

14c. Enter the resulting amount on Line 16 to represent taxable HSA distributions for 2024.

This taxable amount transfers to Schedule 1, Part I, Line 8f as additional income on your Form

1040. A further 20% tax penalty applies to nonqualified distributions unless an exception applies based on age 65 or older, disability, or death. If you qualify for an exception that waives the

requirement to report the additional tax penalty, check the box on Line 17a. Calculate the 20% penalty on the nonqualified portion and report on Line 17b, which transfers to Schedule 2, Part

II, Line 17c.

Report Qualified Medical Expenses for Self-Employed or

Joint Return Filers

If you are self-employed or filing jointly, confirm that qualified expenses are not claimed as medical expense deductions on Schedule A. HSA-funded qualified expenses cannot receive duplicate tax benefits through itemization on your tax return.

Identify and Document Nonqualified Distribution

Exceptions

If you received distributions for non-qualified expenses, determine whether you qualify for an exception that waives the 20% penalty. Individuals age 65 or older, disabled individuals, or beneficiaries of a deceased HSA holder may be eligible for penalty relief under current IRS rules.

Document your qualifying status on Form 8889, Part II, and retain supporting evidence such as birth certificates or disability determinations. The IRS may request this documentation during an audit or after you file your taxes.

Reconcile Form 1099-SA and HSA Custodian Statements

Cross-check the amount on Form 1099-SA Box 1 (Gross distribution) against your HSA custodian's year-end statement and monthly distribution records. Before beginning your tax form preparation, make sure your Form 1099-SA reflects all 2024 distributions.

Please promptly inform your HSA custodian of any discrepancies before filing Form 8889 to prevent processing delays or correction notices. Your custodian must issue a corrected Form

1099-SA if errors are identified before the filing deadline.

Attach Form 8889 to Schedule 1

Form 8889 must accompany Schedule 1 when filed with your Form 1040 or Form 1040-SR. This ensures the IRS receives the HSA distribution reconciliation, along with your income adjustments and other supplemental information from retirement services and health coverage accounts.

Understanding High Deductible Health Plan

Requirements

Only an eligible individual covered by a high-deductible health plan can contribute to an HSA or claim the HSA deduction. A high-deductible health plan must meet specific minimum deductible and maximum out-of-pocket expense thresholds established by the IRS for 2024. Review your health plan documents to confirm your high-deductible health plan meets these requirements before completing tax forms related to your HSA.

Year-Specific Updates for 2024

Form 8889 references HSA rules under Internal Revenue Code Section 223, which remained stable for 2024 with no material threshold or deduction changes. The 20% penalty on non-qualified HSA distributions for 2024 remains unchanged, with exceptions retained for individuals age 65 or older, disabled individuals, and beneficiaries of deceased HSA holders.

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