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IRS Releases 2017 Form 8889 and Instructions for HSA Reporting

EBIA  

EBIA  

IRS Form 8889 (Health Savings Accounts (HSAs)) and Instructions (2017)

The IRS has released the 2017 version of Form 8889 (Health Savings Accounts (HSAs)) and its Instructions. HSA holders (and beneficiaries of deceased HSA holders) must attach Form 8889 to Form 1040 to report tax-related events affecting their HSAs. Reportable items include contributions and distributions. Form 8889 is also used to calculate HSA deductions and any reportable income and additional tax triggered by failing to remain HSA-eligible throughout the applicable testing period for qualified HSA funding distributions or the full-contribution rule (which the form and instructions refer to as the “last-month rule”). The 2017 versions of the form and instructions are largely unchanged from the 2016 versions, but they have been updated to reflect the 2017 HSA contribution limits (see our Checkpoint article) and the slightly later than usual tax filing deadline (April 17, 2017), which also delays the deadline for making HSA contributions for 2017.

EBIA Comment: Although Form 8889 is filed by HSA holders as an attachment to Form 1040, employers and advisors working with HSAs should have a basic understanding of its scope. The similarity of this year’s and last year’s versions was expected, as the rules for HSAs have remained relatively stable since last year. The April 17 deadline for federal income tax returns—and HSA contributions—is due to the Emancipation Day holiday in Washington, D.C., which in 2018 falls on Monday, April 16. For more information, see EBIA’s Consumer-Driven Health Care manual at Sections XI.G (“Other Coverage That May or Will Prevent HSA Eligibility”), XII (“HSAs: Contributions”), XV (“HSAs: Distributions and Rollovers”), and XVII.B (“HSA Holder Reporting Obligations”). You may also be interested in our recorded webinar, “HSAs and Consumer-Driven Health Care: What’s New & What’s Next?” (recorded on 8/16/17).

Contributing Editors: EBIA Staff.

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