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IRS Releases 2018 Form 8889 and Instructions for HSA Reporting

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EBIA  

IRS Form 8889 (Health Savings Accounts (HSAs)) and Instructions (2018)

Form 8889

Instructions

The IRS has released the 2018 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 2018 versions of the form and instructions are largely unchanged from the 2017 versions, but they have been updated to reflect the 2018 HSA contribution limits (see our Checkpoint article) and filing deadline (April 15, 2019), which is also the deadline for making HSA contributions for 2018. In addition, the instructions include a note regarding the $6,900 family HDHP contribution maximum for 2018, which was lowered to $6,850 and then restored to $6,900, directing taxpayers who received distributions of excess contribution based on the lower amount to review Rev. Proc. 2018-27 regarding the tax treatment of the distribution (see our Checkpoint article).

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. While the form and instructions do not mention it, we note that taxpayers in Maine and Massachusetts will have two additional days to file their taxes and make HSA contributions due to local holidays. 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: “Learning the Ropes: An Introduction to HRAs and HSAs(recorded on 8/29/18).

Contributing Editors: EBIA Staff.

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