A 1099-SA arrives in your mailbox when you withdraw funds from your HSA or when your HSA provider provides the IRS with an annual summary. This three-page form lists every dollar that left the account, separates it into taxable and tax-free lines, and lays the groundwork for the 8889 you append to your 1040.
Missing figures and the IRS add interest. These next blocks walk line by line so you file clean and keep the penalty away.
Understanding Your HSA 1099
Form 1099-SA arrives each January and informs the IRS of every dollar that departed your health savings account (HSA) in the previous tax year. Treat it like a W-2 for your medical savings account: miss a number and you will hear from the IRS faster than a late-fee text from your phone carrier.
1. The Payer
The top-left box displays your bank or admin that holds your HSA cash. Make sure the legal name is what you see when you log in. If “HealthEquity” became “Fidelity HSA” after a buy-out, the EIN will change too.
Circle that nine-digit federal ID and park it in your phone contacts. Next year, you’ll thank yourself when you need a corrected form at 10 p.m. On April 12.
2. The Recipient
Your name, SSN, and partial account number reside under “Recipient.” If you wed and ditched your old last name, but never notified the bank, the IRS computers will issue a mismatch letter (CP2000) that puts any refund on hold for weeks.
Match the last four digits printed here against those on your HSA debit card. One typo by a temp worker can replace a 7 with a 1 and leave a path of duplicate forms.
3. Gross Distribution
Box 1 is your headline number. It’s every swipe, online bill-pay, and ATM pull added together. Crack out that yellow highlighter and highlight which dollars covered qualified care, such as dentist visits, new glasses, and insulin, and which bought concert tickets (non-qualified).
You still need to report the total on Form 8889 line 14a although every penny was legit. Leaving it out results in an automatic notice since the IRS already has this number from the custodian.
4. Earnings on Excess
Box 2 shows interest or gains attached to the excess contributions you yanked back out. Let’s say you over-funded by $600 and the account earned $13 as that cash sat there.
Only the $13 goes here. Report it on Schedule 1, line 8z as “HSA excess earnings” and pay ordinary tax, but skip the 20 percent penalty since this was a fix-it withdrawal, not a Vegas blow-out.
5. Distribution Code
That little letter in box 3 determines your next step. Code “1” indicates regular, so proceed with form 8889 to separate qualified from taxable.
Code 2 indicates an excess correction, which means there is no penalty but you must report income. Code “3” means you’re dead; if you’re the beneficiary, quit completing the deceased’s return and open up Form 8853.
Deciphering Your Distributions
The 1099-SA hits your mailbox every January and informs the IRS precisely how many funds left your HSA. Box 1 tells you the cash that went out. Box 3 contains the code that determines your tax destiny, and if the code is incorrect, you get slammed with a 20% penalty and income tax.
Sort before you file:
Dump every receipt into one pile.
Split into two stacks: “doc, drug, dentist” and “other.”
For each stack, add up the numbers on Form 8889 to match the 1099-SA dollar for dollar.
Qualified Expenses
Office copays, x-rays, therapy, insulin, bandages, OTC meds, eye exams, dental fillings, chiropractor, acne cream, fertility test kits, and mileage to the clinic all count. Premiums remain excluded, other than COBRA, long-term care, or Medicare Part B/D.
IRS Pub 502 gets updated quietly. Last year, nasal strips and tampons jumped on the list. Snap a clear phone pic, label it “2024-03-15_Dentist_145.jpg,” and toss it in a cloud folder named “Tax Year 2024 HSA.
Non-Qualified Expenses
Pull cash for groceries and you’re due. Before 65, you pay income tax plus 20 percent on the full amount. After 65, the 20 percent disappears but income tax still gets you.
Add the taxable slice to Schedule 1, line 8z, as ‘HSA non-qualified’.
Tracking Your Distributions
Keep a running sheet of important forms — date, amount, and penalties — to evaluate tax exposure before year-end.
Corrective Actions
See an excess contribution in March? Request a “removal of excess” from the custodian and have them label it code 2 on next year’s 1099-SA. Report the original over-contribution on Form 8889 line 13.
Put the returned cash on line 14a so the IRS sees it came back out. If your software nags, attach a one-line note: “Removed $800 excess for TY 2024 on 4-10-25.
How To Report Your 1099-SA
1099-SA displays each dollar that exited your HSA last year. Box 1 is the gross payout, Box 2 is earnings on excess cash, and Box 3 holds the code that informs the IRS why the money moved.
Copy the Box 1 figure to Form 8889 line 14a, list the qualified bills on line 15, and the sheet nets out what’s taxable. Any remaining amount flows to Schedule 1, line 8z, then back onto Form 1040. Carry your final 8889 PDF in your cloud folder for a solid three years. California and New Jersey will want it, too.
Form 8889
Grab the 2024 file directly from IRS.gov — the old one-and-two-pagers in PDF don’t have the new line 18b. Part I records what you put in. Part II records what came out.
For example, if you had 2 HSAs, put both account numbers in the top box or the e-file will bounce. Run the worksheet on page 4. It turns Box 1 minus line 15 into the taxable slice. For example, $6,000 out, $5,200 of receipts, $800 rides to 18b.
Although you e-file, attach an electronic PIN. IRS considers that a valid signature.
Form 1040
When 8889 spits out a taxable number, drop it on Schedule 1, line 8z. The amount from Schedule 1 auto-feeds to Form 1040, line 8, so the IRS can tax it at your bracket.
If you are under 65 and used the cash for rent, Box 3, code 1 causes the 20% additional tax on Form 5329, line 17. Double check that one-line summary on your 1040 draft — if “HSA” is missing, the penalty calculation didn’t attach.
State Taxes
California and New Jersey still say ‘no thanks’ to the federal deduction, so you add the HSA contribution back on Schedule CA or NJ. Qualified withdrawals remain safe; there is no state tax in spite of the seed money already being taxed.
Keep the state’s one-page HSA worksheet with your return. Auditors just adore mailing a second bill three years later. If you moved mid-year, split the numbers. Only the CA or NJ months get the add-back.
What If Your Form Is Wrong?
Open the 1099-SA the day it arrives. Open your own HSA log next to it and check off every cash-out. A $50 line 3 typo can become $12 extra tax and late fees if you’re in a hurry and file. Circle any gap in red—large or small—so when you call you can read the figures cold.
Don’t submit until that corrected form is in your hand. An amended 1040-X is $0 to mail but costs weeks of waiting and sometimes state fees as well. Staple both the bad and the fixed form in your tax folder. The IRS loves to see the paper trail.
Identify Errors
Scan for three usual suspects: wrong dollar, wrong name, wrong year. A code ‘1’ for normal medical spend that really should be a ‘3’ for rollover flips the entire narrative and triggers the 20% penalty. Last March, a Los Angeles nurse snagged two 1099-SAs for the same withdrawal.
The second had earnings of $18 that she had already moved back; she would have overpaid $4 in tax on that tiny slip. If you pulled out a surplus $700 mid-year, check that the income box shows the $6 interest. A blank means they forgot and you appear as if you held the money.
Contact Custodian
Call the toll-free number underneath the custodian logo, have your HSA debit card nearby. They ask for the last four digits every time. Email a one-page sheet: date, amount, why it’s off. A Fidelity rep told me fixes go through the system quicker when they can paste instead of re-type.
Inquire how long. Most say ten business days, but HealthEquity shortened it to five if you respond same day. If April is breathing down your neck, request a secure fax or encrypted PDF. Mailed paper can take two weeks to cross the country.
Receive Correction
Your new form has a little red ‘CORRECTED’ box. No box means no good. Tear up the crappy one or scribble a big X so you won’t confuse the two at midnight. Tax software likes to import both.
Delete the old row or you will pay tax on money you never saw. Save each PDF in a single folder called “2023 HSA fix” so if the IRS mails CP2000 next fall, you can fire back proof in five minutes.
Beyond Standard HSA Withdrawals
Most people know the basic rules: pay a doctor, pull money out, keep the receipt. The 1099-SA form deals with moves that never hit your checking account. Treat trustee-to-trustee transfers as ‘rollovers,’ not distributions, so they never hit a 1099-SA. Withdraw mistaken contributions by 7/15 if you find out about it post-year.
Death distributions to beneficiaries will get code 3 and special tax treatment. Maintain a separate ledger for these infrequent occurrences so they don’t spill over into your regular medical totals.
Rollovers
A rollover is the cleanest way to move HSA banks. Just have the new custodian request the funds. The previous custodian transfers the funds and emails you a letter indicating ‘trustee-to-trustee transfer.’
Since the funds never hit your hands, the IRS views it as invisible—no 1099-SA, no line on Form 8889, and no triggering the once-per-year rollover rule that applies when you receive a check. Print that letter and staple it to the December statement for the year you moved.
If the IRS ever inquires, you can reference the date and amount all at once. You can do this dance as often as you want, unlike IRA rollovers that limit you to one every 365 days.
Mistaken Contributions
Short: You maxed out in December, then payroll added one more $200 in January. Longer: Pull that $200 and 42¢ of interest before October 15 next year.
Request the bank to code it ‘error of fact’ so the 1099-SA has code 2, but just leave it off Form 8889 line 2 like it never happened. Contain the email in which you originally caught the error.
You’ll need it if the IRS notice arrives two summers down the line.
Account Holder Death
Short: Call the bank the week someone passes. Short: Spouse? The HSA becomes theirs, no 1099, no tax.
Short: Kid? The custodian mails a code 3 1099-SA for the balance. The kid adds that number to their own 1040.
If they spend it on mom’s final bills within one year, Form 5329 wipes the 20 percent penalty.
Important HSA 1099 Deadlines
Form | Who mails it | Must reach IRS by | You need it for |
|---|---|---|---|
1099-SA | HSA bank or custodian | Jan 31 | Showing all 2024 withdrawals |
5498-SA | Same bank | May 31 (June 2 in 2025) | Proving what you put in for 2024 |
The custodian sends the same copy to you and to the IRS. If the mail is late, hold off on filing. Filing without the form can compel you to amend later when the numbers don’t align.
Most banks post the pdf in your online vault by late January. Be sure to turn on text alerts so you know the moment it arrives.
April 15 is the hard stop to pulling out extra dollars you stuffed in for the prior year. Transfer the excess along with any earnings out by that day and the 6% penalty never begins.
Miss it and the penalty settles in for each year the cash remains inside. One Denver couple inadvertently left $800 behind in 2023. They just paid $48 a year until they caught it this spring.
October 15 is your back-up alarm. Although you filed an extension, you’ve got until this date to yank erroneous 2024 gifts and act like they never occurred.
Put a phone reminder to call the bank on October 10 and leave cushion time. One day late and your fix becomes a taxable distribution code 2, which means income tax plus the additional 20 percent surtax on any growth.
Always maintain your own tally of what went in and what came out. The bank can put any of four different code numbers into box 3 of Form 1099-SA.
Code 1 indicates normal medical spending, code 2 marks earnings connected to additional cash, code 3 denotes a rollover, and code 5 describes a deceased owner’s final payout.
If you have two HSAs, verify each box 5 displays its respective account number or the IRS matching engine could throw a hissy.
Highlight January, April, and October on a single line of your calendar.
Conclusion
You’ve peered at the boxes, the codes, the dates. File the 1099-SA along with your 1040, keep the 8889 handy, and hide the receipts for safekeeping. Slip up and the IRS tacks on interest quicker than a Los Angeles parking meter. Day Planner: Phone Alarm for January 31st of next year, beat the mailbox rush, and skip the stress. Your HSA still saves you cash on braces, glasses, or that urgent care run in Burbank; just be honest and save the receipts. Want to double-check your forms? Access your online account, print the pdf, and file before dinner tonight.
Frequently Asked Questions
Do I always get a 1099-SA for my HSA?
You only receive a 1099-SA form if you made a taxable distribution from your health savings account.
What box on the 1099-SA tells the IRS it was for medical bills?
Box 3 code ‘1’ indicates the payout was for qualified medical expenses.
Will California tax my HSA withdrawal?
California doesn’t offer the same break as Uncle Sam. Non-medical distributions contribute to state income.
How do I fix a 1099-SA that lists the wrong dollar amount?
If you don’t, request a corrected tax return form from your HSA account trustee. Don’t guess on your 1040.
What’s the real deadline to mail the 1099-SA?
Trustees must mail the important form by January 31. Keep an eye on your mailbox for various health accounts the first week of February.