Correcting Your HSA Reporting: Two Steps, Two Forms
By Debbie Shipman, CIP, CISP, CHSP
It’s July 16. You take a deep breath and exhale. The 2019 tax season is finally over. Then in walks a client who says that she received an incorrect IRS Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. A wave of dread washes over you. How do you correct IRS forms for health savings accounts (HSAs)? No need to worry. The process is fairly straightforward.
First, determine what happened and what exactly was reported. For example, let’s say on February 25, 2019, Jane Johansen completed an HSA withdrawal authorization form for $300. The transaction was entered into your core system and reported as a $3,000 normal distribution. While “normal” is correct, the dollar value that was entered and, therefore, reported, was incorrect.
Second, complete two IRS forms to correct the error: IRS Form 1099-SA and IRS Form 1096, Annual Summary and Transmittal of U.S. Information Returns. Jane’s corrected IRS Form 1099-SA will reflect the information that should have been reported and mark the CORRECTED box. This indicates to the IRS that the corrected form replaces the original IRS Form 1099-SA. You will also need to complete IRS Form 1096, which reflects the number of IRS Forms 1099-SA being submitted. The information needed to complete Box 5 on the form is located in the instructions, which was part of the form. Also noted in the instructions is the IRS Service Center that you mail the IRS forms to, which is based on your principal business office location.
The process to correct IRS Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, is the same as correcting IRS Form 1099-SA.
As you can see, correcting HSA reporting is an easy process for you and your financial organization. So no need to panic next time a client comes in needing an information return correction.
