What a 1099-SA Is and How It Works With Your Health Savings Account

A 1099-SA reports withdrawals from your health savings account to the IRS

A 1099-SA is a tax form that reports money you took out of a health savings account (HSA) during the tax year. The financial institution that holds your HSA sends this form to you and to the Internal Revenue Service. It shows the total amount you withdrew and the date of each withdrawal.

You receive a 1099-SA whenever you take money out of an HSA, regardless of whether that withdrawal was for a may have access to medical expense or not. The form itself does not tell the IRS whether your withdrawal was allowed — that information happens when you file your tax return. If you withdrew money for a non-medical reason and you are under age 65, you may owe income tax plus a 20 percent penalty on that amount.

The 1099-SA is separate from other tax documents you receive. It is not the same as a 1098-T (education credits) or a 1098-SA (which does not exist — the "SA" in 1099-SA stands for "Savings Account"). You need the 1099-SA information to complete your tax return accurately.

Key Takeaways

• Your HSA custodian sends you a 1099-SA for every withdrawal you make, showing the date and amount.
• The IRS uses the 1099-SA to track HSA activity, but the form does not indicate whether your withdrawal was for a may have access to medical expense.
• Withdrawals for may have access to medical expenses are not taxed, even though they appear on a 1099-SA.
• Non-medical withdrawals before age 65 trigger both income tax and a 20 percent penalty on the withdrawn amount.
• You must keep receipts and records of what you spent HSA money on to prove to the IRS that withdrawals were medical if you are ever audited.

When you receive a 1099-SA and what it includes

Your HSA custodian — the bank, insurance company, or third-party administrator that holds your account — mails or electronically delivers your 1099-SA by January 31 of the year after you made the withdrawal. If you have multiple HSAs, you receive a separate 1099-SA from each custodian.

The form shows your name, Social Security number, and the custodian's information. The key boxes are: Box 1 (gross distribution amount), Box 2 (earnings on the distribution), and Box 3 (fair market value of HSA on December 31). The form also lists the month and year of each withdrawal, though not always the exact date.

If you made no withdrawals during the year, you do not receive a 1099-SA. Some custodians send a statement showing zero distributions instead, but this is not required.

How 1099-SA withdrawals are taxed

The tax treatment of your 1099-SA withdrawal depends on two things: whether the money went to a may have access to medical expense, and your age at the time of withdrawal.

If you withdrew money for a may have access to medical expense — such as deductibles, copays, prescription drugs, dental work, vision care, or medical equipment — that withdrawal is not taxed. You do not owe federal income tax on it, and you do not report it as income on your tax return. The 1099-SA appears in your records, but the withdrawal itself has no tax consequence.

If you withdrew money for something that is not a may have access to medical expense — such as cosmetic surgery, gym memberships, or general living expenses — and you are under age 65, you owe ordinary income tax on that amount plus a 20 percent penalty. If you are 65 or older, you owe income tax but not the penalty. After age 65, an HSA works like a traditional IRA: you can withdraw money for any reason, but non-medical withdrawals are taxed as income.

Reporting your 1099-SA on your tax return

You do not file the 1099-SA itself with your tax return. Instead, you report HSA information on Form 8889 (Health Savings Accounts), which you attach to your Form 1040. Form 8889 asks you to enter the total distributions shown on your 1099-SA and to calculate how much of that was for may have access to medical expenses versus non-may have access to expenses.

If all your withdrawals were for may have access to medical expenses, you enter the total distribution amount on Form 8889 but do not owe any additional tax. If some withdrawals were non-may have access to, you calculate the taxable portion and the 20 percent penalty, and both amounts flow to your Form 1040.

Keep your 1099-SA with your tax records for at least three years. The IRS can request proof that your withdrawals were for may have access to medical expenses during an audit, so you also need to keep receipts, invoices, and medical bills that match the dates and amounts on your 1099-SA.

Multiple 1099-SAs and coordinating with other accounts

If you have HSAs with more than one custodian — for example, if you switched employers or opened a separate HSA for self-employment income — you receive a separate 1099-SA from each one. You must add all the distributions together when you fill out Form 8889. The total of all your 1099-SAs is what you report as your total HSA distributions for the year.

A 1099-SA is different from a 1099-R, which reports distributions from retirement accounts like IRAs and 401(k)s. If you have both an HSA and a retirement account, you receive separate forms for each. Do not confuse them when filing your return.

If you have a dependent care FSA (Flexible Spending Account) or a health FSA, those accounts generate different forms — a 1099-R or a summary statement, depending on the plan. These are not 1099-SAs and follow different tax rules.

What to do if your 1099-SA is wrong

If the amount, date, or custodian information on your 1099-SA does not match your records, contact your HSA custodian when ready. Ask them to issue a corrected form (a 1099-SA with a "CORRECTED" label). The custodian must send the corrected form to you and to the IRS before you file your tax return if possible.

If you receive a 1099-SA after you have already filed your return and you discover an error, you can file an amended return (Form 1040-X) to correct the information. Keep documentation of the error and the custodian's response in case the IRS questions the amendment.

If you made a withdrawal that you later realized was not for a may have access to medical expense, you may be able to redeposit that money back into your HSA within a certain timeframe, depending on your custodian's rules. This is called a "rollover" or "recontribution," and it can help you avoid the tax and penalty. Check with your custodian about their specific policy.

Frequently Asked Questions

Do I have to report a 1099-SA if all my withdrawals were for medical expenses?

You still report the 1099-SA information on Form 8889, but you do not owe any additional tax. Form 8889 is how you tell the IRS that your withdrawals were may have access to, so the IRS does not assess tax or penalties on them. Filing Form 8889 is required whenever you have HSA distributions, even if they were all medical.

What happens if I lose my receipts for HSA withdrawals?

If the IRS audits you and you cannot produce receipts, the IRS may treat those withdrawals as non-may have access to and assess tax plus the 20 percent penalty. You do not need to attach receipts to your tax return, but you must keep them for your records. If you cannot locate them, contact the provider (doctor, pharmacy, hospital) and request copies of the bills or invoices.

Can I withdraw money from my HSA without getting a 1099-SA?

No. Every withdrawal from an HSA generates a 1099-SA, even if the amount is small or the withdrawal is for a may have access to expense. Your custodian is required to report all distributions to the IRS. The 1099-SA is not optional.

Is the 20 percent penalty the same as income tax?

No. They are separate. On a non-may have access to withdrawal, you owe income tax at your regular tax rate (10 percent, 12 percent, 22 percent, etc., depending on your income) plus an additional 20 percent penalty. So a $1,000 non-may have access to withdrawal could result in $220 to $420 in taxes and penalties combined, depending on your tax bracket.

What if I turned 65 during the year and made withdrawals before and after my birthday?

Withdrawals before age 65 follow the normal rules: may have access to expenses are not taxed, non-may have access to expenses are taxed plus penalized. Withdrawals after age 65 are only taxed if they are non-may have access to; there is no penalty. You report both sets of withdrawals on Form 8889, and the form allows you to separate them by age.