Form 8889 2022 Printable, Fillable PDF – Form 8889, which must be filed with your tax return if you are the beneficiary of a health savings account (HSA), is required by the Internal Revenue Service before you may deduct your payments to the account. This form allows you to record your deductible contributions, calculate your deduction, report distributions taken to cover medical expenses, and calculate the tax you must pay on non-medical withdrawals.
What An HSA Is And How It Works
If you have an HSA, you may make yearly tax-deductible contributions of up to $3,600 for individual plans and up to $7,200 for family plans (as of 2021) to help pay for future out-of-pocket medical expenditures. A $1,000 “catch-up” payment, which is also tax deductible, may be made by anybody over 55 who does not already have one.
For as long as the money is maintained in the account, it grows tax-deferred, and any withdrawals you make to pay for eligible medical expenditures are tax-free. This implies that you may pay for your medical bills with money that is not subject to taxation. However, you will only be able to claim this money as tax-free if you include Form 8889 with your tax return.
Qualifying For A Health Savings Account (HSA)
Not all taxpayers are qualified for a health savings account (HSA). If you want to be eligible, you must have health insurance coverage with high deductibles that meet or exceed the levels specified by the Internal Revenue Service. The plan must also provide maximum yearly out-of-pocket expense caps that comply with IRS requirements in addition to hefty deductibles.
The use of a health savings account (HSA) is not permitted if you have other “first-dollar” medical coverage, are enrolled in Medicare, or are reported as a dependent on another taxpayer’s return. On the other hand, disability insurance, dental insurance, vision insurance, long-term care insurance, and catastrophic-disease insurance, such as cancer insurance, will not prohibit you from having an HSA.
Making Use Of HSA funds
An HSA may cover a range of health-related costs for yourself, your spouse, or your dependents. These charges include anything from routine preventive care to surgical procedures and even orthodontic treatment. Although you can use the money in an HSA to pay medical insurance premiums, you can only do so if you are purchasing COBRA coverage after quitting your job or paying premiums while receiving unemployment benefits.
Long-term care insurance premiums and, if you are enrolled in Medicare, deductibles, co-pays, and coinsurance are among the expenses that might be paid with the money you get. In addition to paying tax on non-medical withdrawals, you must also pay a 10% penalty on such withdrawals.
Getting Form 8889 Ready
It is mandatory to complete Form 8889 for each year in which you make contributions to your HSA or make withdrawals from the account, whether you do so yourself or via your employer. The deduction you compute on Form 8889 is applied to your income tax return on the first page of your return. Due to the fact that this is an adjustment to your income, you do not need to be qualified to itemize deductions in order to claim this adjustment.
Remember, with TurboTax, we’ll ask you a few easy questions about your life and assist you in filling out all of the necessary tax paperwork. With TurboTax, you can be certain that your taxes will be completed correctly, whether they are basic or complicated tax returns, regardless of your circumstances.