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Data entry for Health Savings Account (HSA) distributions

Follow these data entry instructions to enter Health Savings Account (HSA) distributions reported on Form 1099-SA and contributions reported on Form 5498-SA. These forms can be used to report Archer MSA and Medicare Advantage MSA Accounts (reportable on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts) or Health Savings Accounts (reportable on Form 8889, Health Savings Accounts [HSAs].)
Refer to the form instructions, and IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, for additional information.
note
  • If you have multiple distributions from the same HSA account, combine the amounts and enter the sum on a single
    1099SA
     screen.
  • If you have multiple distributions from different HSA accounts, enter each account on a separate
    1099SA
     screen, and UltraTax CS will create statement units of Form 8889.
  • Similarly, multiple contributions to the same account should be combined and entered on a single
    5498SA
     screen and multiple accounts should be entered on separate
    5498SA
     screens to create statement units of Form 8889.
  • If there are multiple
    5498SA
     and
    1099SA
     screens, UltraTax CS will match the contributions and distributions to a statement unit of Form 8889 based on the type of account (HSA, MSA, MA MSA) and Trustee EIN.
  • UltraTax CS assumes an even distribution of the applicable contribution limitations among the statement Forms 8889 that are produced. These limitations should be verified and can be allocated in a different way using the
    HSA / MSA limitation (Force)
     and
    Form 8889, line 6 (Force)
     fields on the
    5498SA
     screen.
W-2, Box 12, Code W:
 Employer contributions will carry to Form 8889, Line 9.
  1. Go to the
    5498SA
     screen and enter
    Total contributions made for 2022
    , which includes employer and taxpayer contributions.
  2. Mark the checkbox for
    HSA
     and enter a selection in
    Indicate type of coverage under a qualifying high deductible health plan
     and
    Number of months in qualified high deductible health plan
    .
note
If this amount includes contributions for a different tax year, or is for a 2 percent shareholder, you can adjust the amount that is reported on line 9; to do so, enter data in the
Employer contributions (Force)
 field on the
5498SA
 screen.

Screen 1099SA, Box 1

Enter the gross distribution in the
Gross distribution
 field on the
1099SA
 screen, located under the Health Care folder. The preparer must determine if Box 1 includes any excess contributions withdrawn, and the amount.
note
Also enter the
Amount of unreimbursed qualified medical expenses
 that the HSA distributions were used to pay. This amount is non-taxable.

Screen 1099SA, Box 2

Earnings on excess contributions
 entered in box 2 will only be reported on 1040 line 8 if
2 = Excess Contributions
is selected in Box 3
Distribution code
field.
If you're not using code
2 Excess Contributions
 in box 3 and need to have the excess contributions reported on Form 1040, Schedule 1, line 8, follow these steps.
  1. In the Income folder, go to the
    Income
     screen.
  2. Open the
    Other Income
     statement.
  3. Enter the earnings with the
    Federal Code 6
    .
  4. Enter the earnings on excess contributions, plus any excess contributions withdrawn which were included in Box 1, in the
    Portion of gross distribution rolled over or withdrawal of excess contributions
     field on the
    1099SA
     screen.
note
UltraTax CS will subtract the amount entered in this field from total distributions before determining if there are taxable distributions.
Entering the earnings on excess contributions from Box 2 won't automatically calculate the 6% excise tax on excess contributions to be reported on Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts.
To calculate the additional tax follow these steps.
  1. In the Taxes folder, go to the
    5329
     screen.
  2. Enter any fields necessary to complete Part VII - Additional Tax on Excess Contributions to Health Savings Accounts on Form 5329.
  3. Form 5329 will now show an additional tax, and the tax will be included on Form 1040.

Screen 1099SA, Box 3

Codes 3, 4, and 6 indicate an exception to the 10% penalty tax. A gross distribution entered in Box 1 with a distribution Code of 3, 4, or 6 entered in Box 3 will automatically include the amount in Box 2 as an exception to the additional tax. If a different amount should be used as the exception, enter it in the
Amount of exception to additional tax (Force)
 field on the
1099SA
 screen.
note
If you're combining multiple 1099-SAs from a single account onto a single
1099SA
 screen, you can leave this field blank.

Screen 1099SA, Box 4

Enter the FMV at date of death in the
FMV on date of death
 field on the
1099SA
 screen. Any qualified medical expenses for the account holder that were paid by the taxpayer can be entered in the
If distribution due to death of account holder, enter qualified decedent medical expenses
 field to the taxable amount of the distribution. No penalty will apply. Don't make any entry in this field if the distribution is not due to the death of the account holder.

Screen 1099SA, Box 5

This box indicates whether the distribution is from an HSA, Archer MSA, or Medicare Advantage MSA. This box must be marked.

Screen 5498SA, Box 2

Enter the total contributions to the HSA account that were made in the current tax year. This amount should include employer contributions and qualified HSA funding distributions, if applicable.
note
UltraTax CS will subtract employer contributions reported on the
W2
 screen, in the Income folder, in
Box 12
,
Code W
 and qualified HSA funding distributions reported on the
1099R
 screen, in the Retirement folder, from the
Total HSA/MSA contributions for 2022
 field before carrying the amount to Form 8889, line 2. The
Taxpayer contributions for 2022 (Force)
 field in the
Form 8889 - Health Savings Account
 section of the
5498SA
 screen, can be used to adjust the amount reported on Line 2, if necessary.

Screen 5498SA, Box 3

Enter this amount in the
Total HSA/MSA contributions for 2022
 field.

Screen 5498SA, Box 4

Enter this amount in
Rollover contribution
on the 5498SA Screen.

Screen 5498SA, Box 5

Enter this amount in
FMV of HSA, Archer MSA, or MA MSA
 on the
5498SA
 screen. This amount is used in calculating any additional tax on excess contributions on Form 5329.

Screen 5498SA, Box 6

This box indicates whether the distribution is from an HSA, Archer MSA, or Medicare Advantage MSA. This box must be marked.
The
Indicate type of coverage under qualifying high deductible health plan
 and
Number of months in qualified high deductible health plan
 fields must be completed to calculate Form 8889.
If the high deductible health plan went into effect in 2010 and was in force at the end of the year, enter
Code 1
 for "Yes" in the
HDHP in effect for December 2022
 field in the Form 8889 - Health Savings Account section of the 5498SA Screen to qualify for the liberalized contribution limitation.

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