Instructions for Form 8889 |
2006 Tax Year |
This is archived information that pertains only to the 2006 Tax Year. If you are looking for information for the current tax year, go to the Tax Prep Help Area.
Name and social security number (SSN).
Enter your name(s) as shown on your tax return and the SSN of the HSA beneficiary. If married filing jointly and both
you and your spouse have
HSAs, complete a separate Form 8889 for each of you.
Part I—HSA Contributions and Deductions
Use Part I to figure:
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Your HSA deduction,
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Any excess contributions you made (or those made on your behalf), and
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Any excess contributions made by an employer (see Excess Employer Contributions beginning on page 4).
Figuring Your HSA Deduction
The amount you can deduct for HSA contributions is limited by the applicable portion of the HDHP's annual deductible (line
3) reduced by any
contributions to your Archer MSAs (line 4) and any employer contributions (line 9). If you were age 55 or older at the end
of 2006, you can increase
the contribution limit to your HSA by up to $700 (line 3 or line 7 depending on your type of coverage and marital status).
You can make deductible contributions to your HSA even if your employer made contributions. However, if you (or someone on
your behalf) made
contributions in addition to any employer contributions, you may have to pay an additional tax. See Excess Contributions You Make on page
4.
You cannot deduct any contributions you made after you were enrolled in Medicare. Also, you cannot deduct contributions if
you can be claimed as a
dependent on someone else's 2006 tax return.
Complete lines 1 through 11 as instructed on the form. However, if you, and your spouse if filing jointly, are both eligible
individuals and either
of you have an HDHP with family coverage, complete a separate Form 8889 for each spouse as follows.
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If either spouse has an HDHP with family coverage, you both are treated as having only the family coverage plan. Disregard
any plans with
self-only coverage.
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If both spouses have HDHPs with family coverage, you both are treated as having only the family coverage plan with the lowest
annual
deductible.
Combine the amounts on line 11 of both Forms 8889 and enter this amount on Form 1040, line 25. Be sure to attach both Forms
8889 to your tax
return.
If you were covered by a self-only HDHP and a family HDHP at different times during the year, check the box for the plan that
was in effect for a
longer period. If you were covered by both a self-only HDHP and a family HDHP at the same time, you are treated as having
family coverage during that
period.
Do not include employer contributions or amounts rolled over from another HSA or Archer MSA. Contributions to an employee's
account through a
cafeteria plan are treated as employer contributions. See Rollovers on this page.
When figuring the amount to enter on line 3, apply the following rules.
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Use the family coverage amount if you or your spouse had an HDHP with family coverage. Disregard any plans with self-only
coverage.
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If you and your spouse had more than one HDHP with family coverage, use the plan with the lowest annual deductible.
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If you had family coverage with both an umbrella deductible and an embedded deductible for each individual covered by the
plan, your annual
deductible is the smaller of the:
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Umbrella deductible, or
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Embedded individual deductible multiplied by the number of family members covered by the plan.
Example.
In 2006, you had family coverage under an HDHP for you and your spouse. Both of you were under age 55 at the end of
2006. Your HDHP will pay
benefits for any family member whose covered expenses exceed $2,000 (the embedded individual deductible) and will pay benefits
for all family members
after the covered expenses exceed $5,000 (the umbrella deductible). Your annual deductible is $4,000 (the smaller of $5,000
or $4,000 ($2,000 ×
2)). Your maximum HSA deduction is $4,000 (the smaller of $4,000 or $5,450).
If you did not have the same coverage on the first day of every month during 2006, or you were age 55 or older at the end
of 2006, go through the
chart at the top of the Line 3 Limitation Chart and Worksheet on this page for each month of 2006. Enter the result on the
worksheet next to the
corresponding month.
If eligibility and coverage did not change from one month to the next, enter the same number you entered for the previous
month.
Spouses that have separate HSAs and had family coverage under an HDHP at any time during 2006, use the following rules to
figure the amount on line
6.
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If you were treated as having family coverage for each month you were an eligible individual, divide the amount on line 5
equally between
you and your spouse, unless you both agree on a different allocation (such as allocating nothing to one spouse). Enter your
allocable share on line
6.
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If you were not treated as having family coverage for each month you were an eligible individual, use the following steps
to determine the
amount to enter on line 6.
Step 1.
Refigure the contribution limit that would have been entered on line 5 if you had entered on line 3 the total of the
worksheet amounts only for the
months you were treated as having family coverage. When refiguring line 5, use the same amount you previously entered on line
4.
Step 2.
Divide the refigured contribution limit from Step 1 equally between you and your spouse, unless you both agree on a different allocation
(such as allocating nothing to one spouse).
Step 3.
Subtract the part of the contribution limit allocated to your spouse in Step 2 from the amount you previously entered on line 5. Enter
the result on line 6.
Example.
In 2006, you are an eligible individual and have self-only coverage under an HDHP with a $1,200 deductible. In March,
you get married and as of
April 1, you have family coverage under an HDHP with a $2,400 deductible. Neither you nor your spouse were age 55 or older
at the end of 2006 so you
do not qualify for the additional contribution amount. Your spouse has a separate HSA and is an eligible individual from April
1 through December 31,
2006. The contribution limit for the 9 months of family coverage is $1,800 ($2,400 × 9/12). You and your spouse can divide
the $1,800 in any
allocation you agree to. Your contribution limit for the 3 months of self-only coverage is $300 ($1,200 × 3/12). This amount
is not divided
between you and your spouse. If you and your spouse divide the contribution limit for the months of family coverage equally,
you will show $1,200 on
line 6 ($2,100 from your original line 5 minus $900 allocated to your spouse). Your spouse will show $900 on line 6.
Additional Contribution Amount
If, at the end of 2006, you were age 55 or older and married, use the Additional Contribution Amount Worksheet below if both
of the following
apply.
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You or your spouse had family coverage under an HDHP on the first day of the month.
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You were not enrolled in Medicare for the month.
Enter the result on line 7.
If items (1) and (2) apply to all months during 2006, enter $700 on line 7.
Additional Contribution Amount Worksheet
1.
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$ 700 × number of months eligible
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2.
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Divide line 1 by 12. Enter here and on line 7
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Example.
At the end of 2006, you were age 55 and married. You had family coverage under an HDHP from July 1 through December
31, 2006 (6 months). You were
not enrolled in Medicare in 2006. You would enter an additional contribution amount of $350 on line 7 ($700 × 6/12).
Employer contributions (including contributions through a cafeteria plan) include any amount an employer contributes to any
HSA for you for 2006.
These contributions should be shown in box 12 of Form W-2 with code W. If either of the following apply, complete the Employer
Contribution Worksheet
below.
If your employer made excess contributions, you may have to report the excess as income. See Excess Employer Contributions beginning
below for details.
Employer Contribution Worksheet
1.
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Enter the employer contributions reported in box 12 of Form W-2, with code W
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1.
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2.
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Enter employer contributions made in 2006 for tax year 2005
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2.
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3.
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Subtract line 2 from line 1
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3.
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4.
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Enter employer contributions made in 2007 for tax year 2006
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4.
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5.
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Employer contributions for 2006. Add lines 3 and 4. Enter here and on Form
8889, line 9
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5.
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If you or someone on your behalf (or your employer) contributed more to your HSA than is allowable, you may have to pay an
additional tax on the
excess contributions. Figure the excess contributions using the instructions below. See Form 5329, Additional Taxes on Qualified
Plans (Including
IRAs) and Other Tax-Favored Accounts, to figure the additional tax.
Excess Contributions You Make
To figure your excess contributions (including those made on your behalf), subtract your deductible contributions (line 11)
from your actual
contributions (line 2). However, you can withdraw some or all of your excess contributions for 2006 and they will be treated
as if they had not been
contributed if:
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You make the withdrawal by the due date, including extensions, of your 2006 tax return (but see the Note on page 5),
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You do not claim a deduction for the amount of the withdrawn contributions, and
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You also withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for
the year you withdraw the contributions and earnings.
Excess Employer Contributions
Excess employer contributions are the excess, if any, of your employer's contributions over your limitation on line 8. If
the excess was not
included in income on Form W-2, you must report it as “Other income” on your tax return. However, you can withdraw some or all of the excess
employer contributions for 2006 and they will be treated as if they had not been contributed if:
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You make the withdrawal by the due date, including extensions, of your 2006 tax return (but see the Note below),
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You do not claim an exclusion from income for the amount of the withdrawn contributions, and
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You also withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for
the year you withdraw the contributions and earnings.
Note.
If you timely filed your return without withdrawing the excess contributions, you can still make the withdrawal no later than
6 months after
the due date of your tax return, excluding extensions. If you do, file an amended return with “Filed pursuant to section 301.9100-2” written at
the top. Include an explanation of the withdrawal. Make all necessary changes on the amended return (for example, if you reported
the contributions as
excess contributions on your original return, include an amended Form 5329 reflecting that the withdrawn contributions are
no longer treated as having
been contributed).
Part II—HSA Distributions
Enter the total distributions you received in 2006 from all HSAs. These amounts should be shown in box 1 of Form 1099-SA.
Include on line 12b any distributions you received in 2006 that qualified as a rollover contribution to another HSA. See Rollovers on
page 2. Also include any excess contributions (and the earnings on those excess contributions) included on line 12a that were
withdrawn by the due
date, including extensions, of your return. See the instructions for line 11 beginning on page 4.
Only include on line 13 distributions from your HSA that were used to pay or reimburse you for qualified medical expenses
(see page 1) you incurred
after the HSA was established. Do not include the distribution of an excess contribution taken out after the due date, including
extensions, of your
return even if used for qualified medical expenses.
In general, include on line 13 distributions from all HSAs in 2006 that were used for the qualified medical expenses (see
page 1) of:
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Yourself and your spouse.
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All dependents you claim on your tax return.
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Any person you could have claimed as a dependent on your return except that:
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The person filed a joint return.
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The person had gross income of $3,300 or more.
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You, or your spouse if filing jointly, could be claimed as a dependent on someone else's return.
You cannot take a deduction on Schedule A (Form 1040) for any amount you include on line 13.
HSA distributions included in income (line 14) are subject to an additional 10% tax unless one of the following exceptions
apply.
Exceptions to the Additional 10% Tax
The additional 10% tax does not apply to distributions made after the account beneficiary—
If any of the exceptions apply to any of the distributions included on line 14, check the box on line 15a. Enter on line 15b
only 10% (.10) of any
amount included on line 14 that does not meet any of the exceptions.
Example 1. You turned age 63 in 2006 and received a distribution from an HSA that is included in income. Do not check the box on line
15a because you (the account beneficiary) did not meet the age exception for the distribution. Enter 10% of the amount from
line 14 on line 15b.
Example 2. You turned age 65 in 2006. You received distributions that are included in income both before and after you turned age 65.
Check the box on line 15a because the additional 10% tax does not apply to the distributions made after the date you turned
age 65. However, the
additional 10% tax does apply to the distributions made on or before the date you turned age 65. Enter on line 15b, 10% of
the amount of these
distributions included in line 14.
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