Health Savings Accounts provide an opportunity for individuals to reduce their taxable income as they set aside funds to cover medical expenses not covered by insurance, such as deductibles and prescriptions. There are however some reporting requirements. As you are finalizing your 2010 tax returns be sure you have the following forms .
- Tax form 5498-SA: This form reports contributions made to an account holder’s Health Savings Account (HSA) by the account holder or by an eligible individual on the account holder’s behalf, as well as contributions made by their employer, if applicable. The IRS requires this form be issued to every account holder who had any contribution activity in their HSA during the previous tax year (2010).
- Tax form 1099-SA: This form reports distributions made from an account holder’s HSA. The IRS requires this form to be issued if you took a distribution from their HSA during the previous tax year (2010).
- IRS form 8889: Account holders must obtain, complete and file IRS Form 8889 as part of the federal tax filing by April 18, 2011. It is downloadable from www.irs.gov or If both spouses have an HSA, then two forms are required (one for each account)