Form 8889 (2017) Checklist: Health Savings Accounts – 2017 Tax Year
Purpose
Form 8889 reports Health Savings Account (HSA) contributions, distributions, and qualified medical expenses for the 2017 tax year. The 2017 self-only coverage contribution limit is $3,400; family coverage is $6,750. Individuals age 55 or older as of December 31, 2017, can claim an additional $1,000 catch-up contribution. Nonqualified distributions trigger a 20% additional tax plus ordinary income tax. The ACA shared responsibility payment remained in effect for 2017 and 2018; it was eliminated starting January 1, 2019.
Part I: HSA Contributions and Deduction
Step 1: Verify HDHP Eligibility and Coverage Type
Confirm you were covered under a qualifying High Deductible Health Plan (HDHP) during 2017. Check the appropriate box on line 1 for self-only or family coverage. If your coverage type changed mid-year, you must calculate monthly proration using the Line 3 Limitation Chart and Worksheet in the Form 8889 instructions.
HDHP Requirements for 2017:
- Self-only minimum deductible: $1,300
- Family minimum deductible: $2,600
- Self-only maximum out-of-pocket: $6,550
- Family maximum out-of-pocket: $13,100
Step 2: Report Personal HSA Contributions
Enter all personal HSA contributions on line 2, including contributions made between January 1, 2018, and April 17, 2018, that you designated for 2017. Do NOT include employer contributions, cafeteria plan contributions, rollovers, or qualified HSA funding distributions on this line.
Step 3: Calculate Maximum Allowable Contribution
Enter your maximum allowable HSA contribution on line 3 based on your coverage type and eligibility period. If you were an eligible individual for all 12 months of 2017 without changing the coverage type, enter $3,400 for self-only or $6,750 for family coverage. If you had coverage for only part of the year or changed coverage types, use the monthly proration worksheet to calculate your limit.
Last-Month Rule: If you were an eligible individual on December 1, 2017, you may be considered eligible for the entire year, allowing you to contribute the full annual amount. However, you must remain eligible through December 31, 2018 (the testing period), or include excess contributions in income, subject to a 10% additional tax.
Step 4: Report Archer MSA Contributions
If you or your spouse contributed to an Archer MSA in 2017, enter those amounts from Form 8853 on line 4. Archer MSA contributions reduce your available HSA contribution limit.
Step 5: Calculate Net Contribution Room
Subtract line 4 from line 3 to determine your net HSA contribution room (line 5). If the result is zero or negative, enter -0-.
Step 6: Allocate Family Coverage Between Spouses
If both spouses have separate HSAs and either spouse had family HDHP coverage during 2017, divide the line 5 amount between spouses according to your agreement. Each spouse enters their allocated portion on line 6. The default allocation is 50/50, but you may agree to any division, including allocating nothing to one spouse.
Step 7: Calculate Age 55+ Additional Contribution
If you were age 55 or older on December 31, 2017, you can contribute an additional $1,000. For married couples filing jointly where both spouses have family coverage, calculate the additional contribution on line 7 using the worksheet in the instructions. If you were eligible for all 12 months, enter $1,000. For partial-year eligibility, calculate $1,000 × (number of eligible months ÷ 12).
Important: Each spouse aged 55 or older must contribute the additional $1,000 to their own separate HSA. The catch-up contribution is NOT included on line 3.
Step 8: Determine Your Contribution Limit
Add lines 6 and 7 to calculate your total contribution limit before employer contributions (line 8).
Step 9: Report Employer and Other Contributions
Enter employer contributions from Box 12 of your W-2 (Code W) on line 9, adjusting for any contributions made in 2018 designated for 2016. Report qualified HSA funding distributions from traditional or Roth IRAs on line 10. These are one-time, direct trustee-to-trustee transfers that reduce your available contribution room.
Add lines 9 and 10 to get total contributions from other sources (line 11). Subtract line 11 from line 8 to determine your maximum deductible personal contribution (line 12).
Step 10: Calculate Your HSA Deduction
Enter on line 13 the smaller amount of either your actual contributions (line 2) or your maximum deductible amount (line 12). Transfer this amount to Form 1040, line 25, or Form 1040NR, line 25.
Excess Contributions: If line 2 exceeds line 13, you have made excess contributions subject to a 6% excise tax for each year they remain in your account. You can withdraw excess contributions by your tax return deadline (including extensions) to avoid the penalty, provided you also withdraw earnings on those contributions and include the gains in income.
Part II: HSA Distributions
Step 11: Report All HSA Distributions
Enter total distributions from all HSAs during 2017 on line 14a, as shown on Form 1099-SA. Include distributions made with debit cards, checks, and withdrawals by designated individuals. On line 14b, enter any rollovers to another HSA and any excess contributions withdrawn by the tax filing deadline (including earnings). Subtract line 14b from line 14a to calculate net distributions (line 14c).
Step 12: Document Qualified Medical Expenses
Enter qualified medical expenses paid using HSA distributions on line 15. Qualified expenses include unreimbursed medical costs for you, your spouse, and dependents that would otherwise be deductible on Schedule A. Expenses must be incurred AFTER you established your HSA.
Important Exclusions:
- Insurance premiums (except long-term care, COBRA, unemployment health coverage, and Medicare if age 65+)
- Non-prescription medicines except insulin
- Expenses incurred before HSA establishment
- Expenses reimbursed by insurance
Retain all receipts and documentation for qualified medical expenses. The IRS does not require attachments to Form 8889, but you must substantiate expenses if audited.
Step 13: Calculate Taxable Distributions
Subtract line 15 from line 14c to determine taxable distributions (line 16). Report this amount on Form 1040, line 21, or Form 1040NR, line 21, with the notation “HSA.”
If line 16 shows taxable distributions, calculate the 20% additional tax on line 17b unless you qualify for an exception (death, disability, or age 65+). Check the box on line 17a if any of the exceptions apply. Include the additional tax on Form 1040.
Part III: Income and Additional Tax for Testing Period Failures
Step 14: Calculate Testing Period Failure Amounts
Complete Part III if you failed to maintain HDHP eligibility during a testing period. This applies if you used the last-month rule to contribute the full annual amount but did not remain eligible through December 31, 2018, or if you made a qualified HSA funding distribution and failed to remain eligible for 13 months after the distribution.
Calculate the excess contribution you must include in income on line 18 using the worksheet in the instructions. This amount is subject to a 10% additional tax (line 20), reported on Form 1040 or Form 1040NR.
Filing Requirements and Deadlines
Step 15: Complete and File Form 8889
You must file Form 8889 with Form 1040 or Form 1040NR if:
- You (or anyone on your behalf) made HSA contributions in 2017
- You received HSA distributions in 2017
- You must report testing period failure amounts
- You acquired an HSA due to the account beneficiary’s death
Filing Deadline: The deadline for 2017 returns is April 17, 2018. HSA contributions designated for 2017 can be made through April 17, 2018.
Multiple HSAs: If you have more than one HSA, complete a separate Form 8889 for each account marked “statement” at the top, then complete a controlling Form 8889 combining all amounts. Attach all forms to your return.
Key Reminders for 2017
Contribution Limits:
- Self-only coverage: $3,400
- Family coverage: $6,750
- Age 55+ catch-up: $1,000 (per eligible spouse)
HDHP Coverage Rules:
- You cannot have other health coverage except permitted coverage (dental, vision, accidents, disability, specific disease insurance, workers’ compensation)
- You cannot be enrolled in Medicare
- You cannot be claimed as a dependent on another person’s return
Medicare Enrollment:
- Your contribution limit is zero for any month you are enrolled in Medicare
- Retroactive Medicare enrollment affects contributions for prior months
Qualified Medical Expenses:
- Must be incurred after HSA establishment
- Must be unreimbursed by insurance
- Only prescribed medicines (or insulin) qualify
- Keep receipts for a potential IRS audit
Distribution Tax Rules:
- Qualified medical expense distributions: tax-free
- Nonqualified distributions: ordinary income tax + 20% additional tax
- Exceptions to 20% penalty: death, disability, age 65+
Testing Period:
- Last-month rule: December 1, 2017 – December 31, 2018
- Qualified HSA funding distribution: 13 months from distribution month
- Failure penalty: income inclusion + 10% additional tax
By following this checklist systematically, you ensure accurate reporting of your 2017 HSA activity and maximize your tax benefits while maintaining IRS compliance.
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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.
