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What is Form 1099-SA?
Form 1099-SA is an IRS tax form used to report distributions from Health Savings Accounts (HSAs), Archer Medical Savings Accounts (MSAs), and Medicare Advantage MSAs. It is issued by financial institutions or other custodians managing these accounts, such as banks, insurance companies, or other qualified entities. The form is provided to account holders who have received distributions from their accounts during the tax year, and it details the total amount withdrawn and whether those distributions were taxable.
The primary purpose of Form 1099-SA is to help taxpayers report the distributions correctly on their tax returns. The form includes critical information such as the amount of money withdrawn from the account, the type of distribution (whether for qualified medical expenses, non-qualified expenses, or other purposes), and any penalties or taxes owed. It is essential for taxpayers to carefully review the form to ensure that the amounts reported are accurate and reflect how the funds were used, as improper reporting can lead to fines or incorrect tax calculations.
Deadline for 1099-SA 2025
The deadline for issuing Form 1099-SA for the 2025 tax year is January 31, 2026. Financial institutions or custodians managing HSAs, MSAs, and other similar accounts must provide account holders with their copy of Form 1099-SA by this date. This allows account holders to accurately report their distributions when filing their federal tax returns.
For custodians or financial institutions submitting the forms to the IRS, the deadline is February 28, 2026, if filing by paper, or March 31, 2026, if filing electronically. It is important to meet these deadlines to avoid penalties for late submission. Ensuring the accuracy of the reported distribution amounts is crucial to ensure compliance with IRS tax laws and avoid potential issues with the filing process.
Who must file a 1099-SA?
Form 1099-SA must be filed by financial institutions, banks, insurance companies, or any other organization that administers Health Savings Accounts (HSAs), Archer Medical Savings Accounts (MSAs), or Medicare Advantage MSAs. If an individual has received a distribution of at least $10 from one of these accounts during the tax year, the custodian or administrator must issue Form 1099-SA to report the distribution.
This includes reporting any distribution for qualified medical expenses, non-qualified expenses, or other purposes such as a transfer or rollover of funds between accounts. The form helps account holders report any taxable distributions accurately on their tax returns and ensures compliance with IRS requirements. For example, if the distribution is used for non-medical purposes or does not meet specific criteria, it may be subject to tax penalties.
Financial institutions that administer these types of accounts must ensure the proper filing of Form 1099-SA by the appropriate deadline to avoid penalties for incorrect or late submissions.
Online Filing Instructions for Form 1099-SA 2025
Filing Form 1099-SA online for the 2025 tax year is a convenient process that can be completed through the IRS’s Filing Information Returns Electronically (FIRE) system. Below are the step-by-step instructions for successfully submitting the form electronically:
Step 1: Register for the FIRE System
Before you can file Form 1099-SA online, you must register for the IRS FIRE (Filing Information Returns Electronically) system. To register, visit the IRS website and follow the instructions to create an account. You will need to provide your business information and obtain a filer identification number (PIN). The registration process typically takes several days, so it’s important to register well in advance of the filing deadline.
Step 2: Prepare the Data
Once you are registered for the FIRE system, you must prepare the data for submission. This includes compiling the necessary details for each individual account holder who received a distribution from their HSA, MSA, or Medicare Advantage MSA. Information such as the account holder’s name, address, taxpayer identification number (TIN), and the total amount distributed must be accurately reported.
Step 3: Use IRS-Approved Software
To facilitate the electronic filing of Form 1099-SA, you should use IRS-approved software that helps generate and format the form correctly. Many of these software solutions allow you to import the necessary data and submit the form directly to the IRS. Ensure that the software you use complies with IRS specifications for submitting information returns.
Step 4: Upload the Form to the IRS FIRE System
After preparing the form and confirming its accuracy, log into the IRS FIRE system and upload your file. Once the form is submitted, you will receive a confirmation of receipt or a notification if there are any issues with the form submission. If there are any errors, you will need to correct them before resubmitting.
Step 5: Distribute Copies to Account Holders
Once you’ve successfully submitted the form to the IRS, you must provide a copy to each account holder who received a distribution. This must be done by January 31, 2026, so that recipients have the necessary information to report their distributions on their tax returns.
By following these steps, you will be able to electronically file Form 1099-SA in compliance with IRS requirements, ensuring accuracy and avoiding penalties.
Form 1099-SA: Tax Reporting Pointers
Here are some key tax reporting pointers to keep in mind when filing Form 1099-SA:
1. Report All Distributions
Form 1099-SA must report all distributions from HSA, MSA, or Medicare Advantage MSA accounts, regardless of whether the funds were used for qualified medical expenses or other purposes. Ensure that you accurately report the total amount distributed during the tax year, as this is necessary for both the taxpayer’s tax return and the IRS’s records.
2. Identify Qualified and Non-Qualified Distributions
It’s essential to differentiate between qualified and non-qualified distributions on Form 1099-SA. Qualified distributions, used for qualified medical expenses, are generally not taxable, while non-qualified distributions may be subject to income tax and an additional penalty. Make sure to accurately classify each distribution to avoid errors that could lead to penalties or audits.
3. Report Any Taxable Distributions
If a distribution is taxable, either because it was not used for qualified medical expenses or it was taken before the account holder reached the age of 65, it must be reported as taxable income. Taxpayers may also be subject to a 20% penalty on early non-qualified distributions from HSAs. These amounts must be carefully tracked to ensure proper reporting.
4. Check for Errors in Reporting
Form 1099-SA must be filed accurately. Mistakes, such as incorrect amounts or missing information, can lead to delays in tax processing or penalties for non-compliance. Review all data for accuracy before submitting the form to the IRS or sending it to the account holder.
5. Retain Documentation
Both custodians and account holders should retain copies of Form 1099-SA and any related documents, such as receipts for medical expenses. These documents will be essential if the IRS requests verification of the reported distributions during an audit or if discrepancies arise.
By keeping these pointers in mind, you can ensure that your Form 1099-SA filing is accurate and complete, helping both custodians and account holders comply with tax laws and avoid unnecessary penalties. If you have questions or uncertainties, consulting a tax professional is always a good idea.