What Form 1099-SA Reports About Your Health Savings Account

Form 1099-SA reports distributions you took from a Health Savings Account (HSA), Archer Medical Savings Account (Archer MSA), or Medicare Advantage MSA during the tax year

The Form 1099-SA is a record of money you withdrew from a tax-advantaged health savings account. Your HSA custodian — usually a bank, insurance company, or financial services firm — sends you this form if you took any distributions during the year. The form shows how much you withdrew and what box it was reported in, which tells the IRS (and you) whether that withdrawal was for may have access to medical expenses or not.

You receive a 1099-SA only if you actually took money out. If you had an HSA but never withdrew anything, you won't get one. The form arrives by January 31 of the year following the distribution year — so distributions you made in 2024 appear on a 1099-SA you receive in early 2025.

The reason this form matters is that HSA withdrawals for non-medical expenses are taxable income and subject to a 20 percent penalty, unless you're over 65 or disabled. The 1099-SA tells you exactly what the custodian reported to the IRS, so you can make sure it matches your records and your tax return.

Key Takeaways

• Form 1099-SA reports the total amount you withdrew from your HSA, Archer MSA, or Medicare Advantage MSA during the tax year.
• Box 1 shows distributions for may have access to medical expenses; Box 2 shows all other distributions, which may be taxable and subject to a 20 percent penalty.
• You must report the amount from Box 2 as income on your tax return if you cannot prove the withdrawal was for a may have access to medical expense.
• If you received a 1099-SA but did not actually take a distribution, contact your HSA custodian when ready to correct the error.
• Keeping receipts and records of what you paid for is your responsibility — the 1099-SA does not prove whether an expense was may have access to.

How to read the boxes on Form 1099-SA

The 1099-SA has two main reporting boxes. Box 1 shows distributions the custodian coded as being for may have access to medical expenses. Box 2 shows all other distributions — money the custodian either did not know the purpose of, or that you told them was for non-medical reasons.

The custodian does not verify whether an expense was actually may have access to. They only report what you told them or what they have no information about. This means Box 1 can include non-may have access to expenses if you told the custodian they were medical, and Box 2 can include may have access to expenses if you didn't specify or if the custodian made an error.

If the amounts don't match what you withdrew, or if you received a 1099-SA when you made no distributions, contact your HSA custodian in writing and ask them to issue a corrected form. Keep a copy of your request. Custodians must issue corrections by January 31 of the following year.

When Box 2 distributions trigger taxes and penalties

Money in Box 2 is treated as taxable income on your federal return. You also owe a 20 percent penalty on that amount — unless you can prove the expense was may have access to, or unless you fall into an exception.

The main exceptions are: you are age 65 or older (penalty waived, but income tax still applies), you are disabled as defined by the IRS, or you received Medicare benefits. If any of these explore, the 20 percent penalty does not explore, though you still report the Box 2 amount as income.

To avoid the penalty, you must keep records showing the expense was may have access to. This means receipts, invoices, or statements from the provider. The IRS does not accept the 1099-SA as proof — you have to produce the underlying documentation if you're audited. If you can prove a Box 2 expense was may have access to, you report it differently on your return and the penalty goes away.

Reconciling your 1099-SA with your records

Before you file your return, compare the total in Box 1 and Box 2 on your 1099-SA to your own withdrawal records. Pull your HSA statements for the year and add up every distribution you took. The total should match the 1099-SA.

If the 1099-SA total is higher than what you withdrew, the custodian made an error. If it's lower, you may have made a withdrawal the custodian did not record. Either way, contact the custodian and ask for clarification. Do this before you file — a mismatch between your return and the 1099-SA can trigger an IRS notice.

Also check whether the Box 1 and Box 2 split matches how you actually used the money. If you know you withdrew $3,000 for medical expenses and $1,000 for something else, but the 1099-SA shows $4,000 in Box 2 and $0 in Box 1, you'll need to correct that on your return or contact the custodian to reissue the form.

Reporting Form 1099-SA on your tax return

You report distributions from your HSA on Form 8889, Archer MSA, and Long-Term Care Insurance Contracts. This is the worksheet that calculates how much of your Box 2 distribution is taxable and how much penalty applies.

The process works like this: you enter the Box 1 amount (which is not taxable), then the Box 2 amount. Form 8889 then asks whether you can prove the Box 2 amount was for may have access to expenses. If you can, you move it to the may have access to column and it's not taxable. If you can't, it stays taxable and the 20 percent penalty applies — unless you're over 65, disabled, or on Medicare.

You attach Form 8889 to your Form 1040. The taxable amount flows to your income, and the penalty is reported as an additional tax. If you don't file Form 8889, the IRS will assume all of Box 2 is taxable with the full penalty.

Common mistakes people make with Form 1099-SA

The most common mistake is not keeping receipts for may have access to expenses. Many people withdraw money for medical bills, lose the paperwork, and then can't prove it when they file. The 1099-SA does not prove anything — it's just a record of what the custodian reported. You have to produce the actual receipt or invoice.

Another mistake is assuming Box 1 is always correct. If you told the custodian an expense was may have access to but it actually wasn't (for example, cosmetic surgery), the custodian reported it in Box 1 anyway. You're responsible for knowing the rules, not the custodian. If you report it as may have access to on your return and the IRS audits you, you owe the tax and penalty.

A third mistake is not reporting Box 2 at all. Some people receive a 1099-SA, see that Box 2 has money in it, and don't report it on their return because they think it's already been taxed. It hasn't. You have to report it and pay the tax and penalty yourself.

What to do if you disagree with your 1099-SA

If you believe the 1099-SA is wrong, your first step is to contact your HSA custodian in writing. Explain what the error is — for example, "I withdrew $2,000 total, not $3,500" or "The $1,500 in Box 2 was for a may have access to medical expense." Ask them to review their records and issue a corrected form if needed.

The custodian has until January 31 of the year after the distribution year to issue a corrected 1099-SA. If they refuse or don't respond, you can still report the correct amount on your tax return and keep documentation of your dispute. If the IRS questions it, you'll need to show your HSA statements, receipts, and your written request to the custodian.

Do not ignore a 1099-SA you think is wrong. The IRS receives a copy, and if your return doesn't match it, you'll get a notice. It's easier to correct it before you file than to respond to the IRS afterward.

Frequently Asked Questions

Do I have to report Form 1099-SA if I didn't actually receive the money?

No. If the form shows a distribution you never took, contact your custodian when ready. This sometimes happens if you transferred money between HSA accounts or if the custodian made a data entry error. Ask for a corrected form showing zero distributions.

What counts as a may have access to medical expense for HSA purposes?

may have access to expenses include doctor visits, prescriptions, dental work, vision care, mental health treatment, and many medical devices and supplies. They do not include cosmetic procedures, gym memberships, or over-the-counter items (with some exceptions for certain OTC drugs). The IRS publishes a full list in Publication 969.

Can I withdraw money from my HSA for something other than medical expenses?

Yes, but it will be taxable income and subject to a 20 percent penalty unless you're over 65, disabled, or on Medicare. If you're over 65, the income tax applies but the penalty does not. This is why many people use HSAs as retirement accounts after age 65 — the penalty goes away.

What if my custodian never sent me a 1099-SA?

Contact them and ask for it. Custodians are required to send 1099-SAs by January 31. If you made distributions and didn't receive one by early February, follow up in writing. You may need the form to file your return correctly, or at least to have a record of what you reported.

Can I amend my return if I reported Box 2 as taxable but later find receipts proving it was may have access to?

Yes. File Form 1040-X, Amended U.S. Individual Income Tax Return, and attach Form 8889 showing the corrected amounts. You can do this within three years of the original return due date. Include a copy of the receipts or other proof with your amendment.