U.S. Individual Income Tax Return

Instructions for Form 8889
Health Savings Accounts (HSAs)
Purpose:

This is the first circulated draft of the 2007 Instructions for Form 8889,
Health Savings Accounts (HSAs). The major changes are discussed
below.

TPCC Meeting:

None scheduled, but may be arranged if requested.

Instructions:

The 2007 Form 8889 was circulated earlier.

Prior Revisions:

The 2006 Instructions for Form 8889 can be viewed by clicking on the
following link:
http://www.irs.gov/pub/irs-pdf/i8889.pdf

Other Products:

Circulations of draft tax forms, instructions, notices, and publications are
posted at http://taxforms.web.irs.gov/draft_products.html.

Comments:

Please call, mail, email, or fax any comments by Wednesday, October
17, 2007.
Major Changes

1.

All year references have been changed.

2.

A "What's New" heading has been added.
(TA IRC 106(e), 223(b)(8)(B), 408(d)(9))

2.

A new bullet under Purpose of Form has been added re: Figure amounts you must
include… (TA IRC 106(e), 223(b)(8)(B), 408(d)(9))

3.

The contribution limit amounts have been changed to reflect that the limit based on
HDHP plan deductibles no longer applies. (TA IRC 223(b); Rev Proc 2006-53, 3.24(1))

4.

The minimum and maximum amounts used to define an HDHP have changed.
(TA Rev Proc 2006-53, 3.24(2))

5.

The additional contribution amount has been changed to $800.
(TA IRC 223(b)(3))

6.

Information on Rollovers from HRAs and health FSAs and IRAs have been added.
(TA IRC 106(e), 408(d)(9))

7.

The line 2 instructions have been changed to reflect those on the form.
(TA TAP suggestions)

8.

The Line 3 instructions have been expanded to include information on part-year
coverage. (TA IRC 223(b)(2), 223(b)(8)(A)

9.

The old line 6 example was deleted and two new examples (A and B) were added.
(TA IRC 223(b)(8), CC email 05/17/2007)

10.

New line 10 instructions have been added to cover qualified HSA funding distributions.
(TA IRC 106(e), Notice 2007-22)

11

Instructions for new Part III have been added to figure income and additional tax for
failure to maintain HDHP coverage. (TA IRC 106(d), 223(b)(8), 408(d)(9))

For those unable to read adobe notes, changes are being made to the Line 3 Limitation Chart
and Worksheet on page 3. The deletions should be evident by the lines crossing them, but all
changes are discussed below.
A.

Under the heading in the italics – "this" is being deleted and "4" is being added after
the word "page."

B.

In the box on the left side under the first "no" we are adding "(see the line 3 instructions
on page 4)" before the question mark.

C.

In the box above the boxes containing "Self-only coverage" and "Family coverage,"
we are deleting the parenthetical.

FROM:

EMAIL:

PHONE:

FAX:

ROOM:

Paul.W.Miller@irs.gov

202-293-2926

202-283-7008

C7-261

Paul. W. Miller
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Instructions for Form 8889

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2007

Department of the Treasury
Internal Revenue Service

Instructions for Form 8889
Health Savings Accounts (HSAs)
Section references are to the Internal
Revenue Code unless otherwise noted.

General Instructions
What’s New
Contribution limit. Contributions to
your health savings account (HSA) are
no longer limited to your annual health
plan deductible. For 2007, your annual
contribution and deduction limit is
$2,850 if you have a high deductible
health plan with self-only coverage, or
$5,650 if you have family coverage. If
you are age 55 or older at the end of
2007, your additional contribution
amount is $800.
Part-year coverage. If you are an
eligible individual on the first day of the
last month of your tax year, you are
considered an eligible individual for the
entire tax year for purposes of
determining the amount that can be
contributed to your HSA. If you fail to
remain an eligible individual during the
testing period, you will have to include
certain amounts in income and are
subject to a 10% additional tax on that
amount.
Qualified HSA distribution. You may
be able to make a qualified HSA
distribution from your health flexible
spending arrangement or health
reimbursement arrangement to your
HSA. If you fail to remain an eligible
individual during the testing period, you
will have to include the distribution in
income and are subject to a 10%
additional tax on that distribution.
Qualified HSA funding distribution.
You can make a qualified HSA funding
distribution from your individual
retirement arrangement to your HSA. If
you fail to remain an eligible individual
during the testing period, you will have
to include the distribution in income and
are subject to a 10% additional tax on
that distribution.

Purpose of Form
Use Form 8889 to:

• Report health savings account (HSA)

contributions (including those made on
your behalf and employer
contributions),
• Figure your HSA deduction,
• Report distributions from HSAs, and

• Figure amounts you must include in

income and additional tax you may owe
if you fail to be an eligible individual.
Additional information. See Pub.
969, Health Savings Accounts and
Other Tax-Favored Health Plans, for
more details on HSAs.

Who Must File
You must file Form 8889 if any of the
following applies.
• You (or someone on your behalf,
including your employer) made
contributions for 2007 to your HSA.
• You received HSA distributions in
2007.
• You must include certain amounts in
income because you failed to be an
eligible individual during the testing
period.
• You acquired an interest in an HSA
because of the death of the account
beneficiary. See Death of Account
Beneficiary on page 2.

Definitions
Eligible Individual
To be eligible to have contributions
made to your HSA, you must be
covered under a high deductible health
plan (HDHP) and have no other health
coverage except permitted coverage. If
you are an eligible individual, anyone
can contribute to your HSA. However,
you cannot be enrolled in Medicare or
be claimed as a dependent on another
person’s tax return. You must be, or be
considered, an eligible individual on the
first day of a month to take an HSA
deduction for that month (see
Last-month rule next).
Last-month rule. If you are an eligible
individual on the first day of the last
month of your tax year (December 1 for
most taxpayers), you are considered to
be an eligible individual for the entire
year.
Testing period. You must remain
an eligible individual during the testing
period. The testing period begins with
the last month of your tax year and
ends on the last day of the 12th month
following that month (for example,
December 1, 2007 – December 31,
2008). If you fail to remain an eligible
individual during this period, other than
because of death or becoming
Cat. No. 37971Y

disabled, you will have to include in
income the total contributions made
that would not have been made except
for the last-month rule. You include this
amount in income in the year in which
you fail to be an eligible individual. This
amount is also subject to a 10%
additional tax. (See Part III).

Account Beneficiary
The account beneficiary is the
individual on whose behalf the HSA
was established.

HSA
Generally, an HSA is a health savings
account set up exclusively for paying
the qualified medical expenses of the
account beneficiary or the account
beneficiary’s spouse or dependents.

Distributions From an HSA
Distributions from an HSA used
exclusively to pay qualified medical
expenses of the account beneficiary,
spouse, or dependents are excludable
from gross income. (See the line 15
instructions for information on medical
expenses of dependents not claimed
on your return.) You can receive
distributions from an HSA even if you
are not currently eligible to have
contributions made to the HSA.
However, any part of a distribution not
used to pay qualified medical expenses
is includible in gross income and is
subject to an additional 10% tax unless
an exception applies.

Qualified Medical Expenses
Generally, qualified medical expenses
for HSA purposes are unreimbursed
medical expenses that could otherwise
be deducted on Schedule A (Form
1040). See the Instructions for
Schedule A and Pub. 502, Medical and
Dental Expenses (Including the Health
Coverage Tax Credit). However, you
cannot treat insurance premiums as
qualified medical expenses unless the
premiums are for:

• Long-term care (LTC) insurance,
• Health care continuation coverage
(such as coverage under COBRA),

• Health care coverage while receiving
unemployment compensation under
federal or state law, or
• Medicare and other health care
coverage if you were 65 or older (other

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Instructions for Form 8889

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than premiums for a Medicare
supplemental policy, such as Medigap).

High Deductible Health Plan
An HDHP is a health plan that meets
the following requirements.

Minimum annual
deductible
Maximum annual
out-of-pocket
expenses*

impairment which can be expected to
result in death or to continue
indefinitely.

expenses. Generally, these
distributions are subject to the
additional 10% tax.

Death of Account Beneficiary

Rollovers

If the account beneficiary’s surviving
spouse is the designated beneficiary,
the HSA is treated as if the surviving
Self-only Family
coverage coverage spouse were the account beneficiary.
The surviving spouse completes Form
8889 as though the HSA belonged to
$1,100
$2,200 him or her.

$5,500

$11,000

* This limit does not apply to deductibles and
expenses for out-of-network services if the plan
uses a network of providers. Instead, only
deductibles and out-of-pocket expenses (such as
copayments and other amounts, but not
premiums) for services within the network should
be used to figure whether the limit is reached.

An HDHP can provide preventive
care and certain other benefits with no
deductible or a deductible below the
minimum annual deductible. For more
details, see Pub. 969. An HDHP does
not include a plan if substantially all of
the coverage is for accidents, disability,
dental care, vision care, or long-term
care. An HDHP also cannot be
insurance that you are permitted to
have in addition to an HDHP. See
Other Health Coverage next.

Other Health Coverage
If you have an HSA, you (and your
spouse, if you have family coverage)
generally cannot have any health
coverage other than an HDHP. But
your spouse can have health coverage
other than an HDHP if you are not
covered by that plan. If you have a
health flexible spending arrangement or
health reimbursement arrangement,
see Pub. 969.
Exceptions. You can have additional
insurance that provides benefits only
for:
• Liabilities under workers’
compensation laws, tort liabilities, or
liabilities arising from the ownership or
use of property,
• A specific disease or illness, or
• A fixed amount per day (or other
period) of hospitalization.
You can also have coverage (either
through insurance or otherwise) for
accidents, disability, dental care, vision
care, or long-term care.
For information on prescription drug
plans, see Pub. 969.

Disabled
An individual generally is considered
disabled if he or she is unable to
engage in any substantial gainful
activity due to a physical or mental

If the designated beneficiary is not
the account beneficiary’s surviving
spouse, or there is no designated
beneficiary, the account ceases to be
an HSA as of the date of death. The
beneficiary completes Form 8889 as
follows.
• Enter “Death of HSA account
beneficiary” across the top of Form
8889.
• Enter the name(s) shown on your tax
return and your SSN in the spaces
provided at the top of the form and skip
Part I.
• On line 14a, enter the fair market
value of the HSA as of the date of
death.
• On line 15, for a beneficiary other
than the estate, enter qualified medical
expenses incurred by the account
beneficiary before the date of death
that you paid within 1 year after the
date of death.
• Complete the rest of Part II.
If the account beneficiary’s estate is
the beneficiary, the value of the HSA as
of the date of death is included on the
account beneficiary’s final income tax
return. Complete Form 8889 as
described above, except you should
complete Part I, if applicable.
The distribution is not subject to the
additional 10% tax. Report any
earnings on the account after the date
of death as income on your tax return.

Deemed Distributions From
HSAs
The following situations result in
deemed distributions from your HSA.
• You engaged in any transaction
prohibited by section 4975 with respect
to any of your HSAs, at any time in
2007. Your account ceases to be an
HSA as of January 1, 2007, and you
must include the fair market value of all
assets in the account as of January 1,
2007, on line 14a.
• You used any portion of any of your
HSAs as security for a loan at any time
in 2007. You must include the fair
market value of the assets used as
security for the loan as income on line
21 of Form 1040 or Form 1040NR.
Any deemed distribution will not be
treated as used to pay qualified medical

-2-

A rollover is a tax-free distribution
(withdrawal) of assets from one HSA or
Archer MSA that is reinvested in
another HSA. Generally, you must
complete the rollover within 60 days
after you received the distribution. You
can make only one rollover contribution
to an HSA during a 1-year period. See
Pub. 590, Individual Retirement
Arrangements (IRAs), for more details
and additional requirements regarding
rollovers.
Note. If you instruct the trustee of your
HSA to transfer funds directly to the
trustee of another HSA, the transfer is
not considered a rollover. There is no
limit on the number of these transfers.
Do not include the amount transferred
in income, deduct it as a contribution,
or include it as a distribution on
line 14a.
Qualified HSA distribution. This is a
distribution from a health flexible
spending arrangement (FSA) or health
reimbursement arrangement (HRA) that
is contributed by your employer directly
to your HSA. This is a one-time
distribution from any of these
arrangements. The distribution is
treated as a rollover contribution to the
HSA and is subject to the testing period
rules shown below. See Pub. 969 for
more information.
Testing period. You must remain
an eligible individual during the testing
period. the testing period begins with
the month in which the qualified HSA
distribution is contributed to the HSA
and ends on the last day of the 12th
month following that month. For
example, if the distribution is
contributed on June 12, 2007, the
testing period ends on June 30, 2008. If
you fail to remain an eligible individual
during this period, other than because
of death or becoming disabled, you will
have to include the qualified HSA
distribution in income in the year in
which you fail to be an eligible
individual. This amount is also subject
to a 10% additional tax. (See Part III).

Specific Instructions
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.

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Instructions for Form 8889

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Part I—HSA
Contributions and
Deductions
Use Part I to figure:
• Your HSA deduction,
• Any excess contributions you made
(or those made on your behalf), and
• Any excess contributions made by an
employer (see Excess Employer
Contributions beginning on page 5).

Line 3 Limitation Chart and Worksheet
Go through this chart for each month of 2007.
See the instructions for line 3 on this page.
(Keep for your records)

Start Here
Were you enrolled in Medicare for the
month?

Yes

No

Figuring Your HSA
Deduction
The maximum amount that can be
contributed to your HSA depends on
the type of HDHP coverage you have. If
you have self-only coverage, your
maximum contribution is $2,850. If you
have family coverage, your maximum
contribution is $5,650.

䊲

Were you an eligible individual (see
page 1 of the instructions) on the first
day of the month?

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 and qualified
HSA funding distributions, you may
have to pay an additional tax. See
Excess Contributions You Make on
page 5.

䊳

No

䊲

What type of coverage did your HDHP provide on the first day of the
month (see items (1) through (3) in the instructions for line 3, on this page)?

Self-only coverage
Enter $2,850 on the line below for the
month. If you were age 55 or older at the
end of 2007, increase this amount by
$800.

Family coverage
Enter $5,650 on the line below for the
month. If, at the end of 2007, you were
unmarried and age 55 or older, increase
this amount by $800.

Amount from
chart above

Month in 2007
January
February
March
April

You cannot deduct any contributions
for any month in which you were
enrolled in Medicare. Also, you cannot
deduct contributions if you can be
claimed as a dependent on someone
else’s 2007 tax return.

May
June
July
August

How To Complete Part I
Complete lines 1 through 13 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,
you both are treated as having only the
family coverage plan. Disregard any
plans with self-only coverage.

Enter -0- on the line
below for the month.

Yes

Note. If you are age 55 or older at the
end of 2007, you can make an
additional contribution of $800.
Your maximum contribution is
reduced by any employer contributions
to your HSA, any contributions made to
your Archer MSA, and any qualified
HSA funding distributions.

䊲

September
October
November
December
Total for all months
Limitation. Divide the total by 12. Enter here and on line 3

Complete a separate Form 8889 for
each spouse. Combine the amounts on
line 13 of both Forms 8889 and enter
this amount on Form 1040, line 25; or
Form 1040NR, line 25. Be sure to
attach both Forms 8889 to your tax
return.

-3-

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Instructions for Form 8889

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Line 1
If you were covered, or considered
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.

Line 2
Include on line 2 only those amounts
you, or others on your behalf,
contributed to your HSA. Include those
contributions made from January 1,
2008, through April 15, 2008, that were
for 2007. Do not include employer
contributions (see line 9) or amounts
rolled over from another HSA or Archer
MSA, or a qualified HSA distribution.
See Rollovers on page 2. Also, do not
include any qualified HSA funding
distributions (see line 10). Contributions
to an employee’s account through a
cafeteria plan are treated as employer
contributions and are not included on
line 2.

Line 3
When figuring the amount to enter on
line 3, apply the following rules.
1. Use the family coverage amount
if you or your spouse had an HDHP
with family coverage. Disregard any
plan with self-only coverage.
2. If the last-month rule (see page
1) applies, you are considered an
eligible individual for the entire year.
You are treated as having the same
HDHP coverage for the entire year as
you had on the first day of the last
month of your tax year.
3. If you were, or were considered,
an eligible individual for the entire year
and you did not change your type of
coverage, enter $2,850 for a self-only
HDHP or $5,650 for a family HDHP on
line 3. (see 6 below.)
4. If you were, or were considered,
an eligible individual for the entire year
and you changed your type of coverage
during the year, enter on line 3 (see 6
below) the greater of:
a. The sum of the limits determined
each month (use the Line 3 Limitation
Chart and Worksheet on page 3), or
b. The maximum amount that can
be contributed based on the type of
HDHP coverage you had on the first
day of the last month of your tax year.
If you had family coverage on

TIP the first day of the last month,
you do not need to use the
worksheet, enter $5,650 on line 3.
5. If you were not an eligible
individual on the first day of the last
month of your tax year, use the Line 3
Limitation Chart and Worksheet on

page 3 to determine the amount to
enter on line 3. (see 6 below.)
6. If, at the end of 2007, you were
unmarried and age 55 or older, you can
increase the amount determined in 3 or
4 by $800 (the additional contribution
amount). For 5 above, the additional
contribution amount is taken into
account for each month you are an
eligible individual.
Note. If you are married, the additional
contribution amount is figured on line 7
and is not included on line 3.
See Pub. 969 for more information.
If you must complete the line 3

TIP worksheet, and your eligibility
and coverage did not change
from one month to the next, enter the
same number you entered for the
previous month.

Line 6
Spouses that have separate HSAs and
had family coverage under an HDHP at
any time during 2007, use the following
rules to figure the amount on line 6.
• If you are treated as having family
coverage for each month, 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.
Example. In 2007, you are an
eligible individual and have self-only
HDHP coverage. In March you marry
and as of April 1 you have family HDHP
coverage. Neither you nor your spouse
qualify for the additional contribution
amount. Your spouse has a separate
HSA and is an eligible individual from
April 1 to December 31, 2007. Because
you and your spouse are considered to
have family coverage on December 1,
your contribution limit is $5,650 (the
family coverage maximum). You and
your spouse can divide this amount in
any allocation to which you agree (such
as allocating nothing to one spouse).
• If you are not treated as having
family coverage for each month, 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).

-4-

Step 3. Subtract the part of the
contribution limit allocated to your
spouse in Step 2 from the amount
determined in Step 1.
Step 4. Determine any other
contribution limits that apply for the tax
year and add that amount to the result
in Step 3. Enter the total on line 6.
Example. In 2007, you are an
eligible individual and have family
HDHP coverage. In March you divorce
and change your coverage as of April 1
to self-only. Neither of you qualify for
the additional contribution amount. Your
spouse continued to have family HDHP
coverage and was an eligible individual
for the entire year. The contribution limit
for the 3 months you both were
considered to have family coverage is
$1,412.50 ($5,650 × 3 ÷ 12). You and
your spouse divide the family coverage
contribution equally. Your contribution
limit for 9 months of self-only coverage
is $2,137.50 ($2,850 × 9 ÷ 12). This
amount is not divided between you and
your spouse.
Because you are covered under a
self-only policy on December 1, you will
show $2,850 on line 6 (the greater of
either (a) the sum of the limits for each
month ($2,843.75 ($1,412.50 family
coverage + $2,137.50 self-only
coverage – $706.25 spousal
allocation)) or (b) the maximum amount
that can be contributed ($2,850 for
self-only coverage)). Your ex-spouse
would show $5,650 on line 6 (the
greater of either (a) the sum of the
limits for each month ($4,943.75
($1,412.50 family coverage for the 3
months prior to the divorce + $4,237.50
family coverage maintained after the
divorce – $706.25 spousal allocation))
or (b) the maximum amount that can be
contributed ($5,650 for family
coverage)).

Line 7
Additional Contribution Amount
If, at the end of 2007, you were age 55
or older and married, use the Additional
Contribution Amount Worksheet on
page 5 if both of the following apply.
1. You or your spouse had family
coverage under an HDHP and were, or
were considered to be, an eligible
individual on the first day of the month.
2. You were not enrolled in
Medicare for the month.
Enter the result on line 7.
If items (1) and (2) apply to all

TIP months during 2007, enter $800
on line 7.

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Instructions for Form 8889

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Additional Contribution Amount
Worksheet
1. $ 800 × number of months
eligible . . . . . . . . . . . . . . . . .
2. Divide line 1 by 12. Enter here
and on line 7 . . . . . . . . . . . . .

Example. At the end of 2007, you
were age 55 and married. You had
family coverage under an HDHP from
January 1 through June 30, 2007 (6
months). You were not enrolled in
Medicare in 2007. You would enter an
additional contribution amount of $400
on line 7 ($800 × 6 ÷ 12).

Line 9
Employer Contributions
Employer contributions (including
contributions through a cafeteria plan)
include any amount an employer
contributes to any HSA for you for
2007. 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 on page 5.
• Employer contributions for 2006 are
included in the amount reported in box
12 of Form W-2 with code W.
• Employer contributions for 2007 are
made in 2008.
If your employer made excess
contributions, you may have to report
the excess as income. See Excess
Employer Contributions on this page.

Line 10
Enter on line 10 any qualified HSA
funding distribution. This is a
distribution from your IRA, other than a
SEP IRA or SIMPLE IRA, to your HSA
in a direct trustee-to-trustee transfer.
This distribution is not included in your
income, is not deductible, and reduces
the amount that can be contributed to
your HSA.
The maximum amount that can be
excluded from income is based on your
HDHP coverage (self-only or family).
You can make only one qualified HSA
funding distribution during your lifetime.
However, if you make the distribution
during a month when you have
self-only HDHP coverage, you can
make another qualified HSA funding

distribution in a later month in that tax
year if you change to family HDHP
coverage.
A qualified HSA funding distribution
made during your tax year reduces the
amount that can be contributed from
other sources (including employer
contributions) to your HSA. See the
discussions under Line 13 for the
treatment of excess contributions.
See Pub. 969 for more information.
Testing period. You must remain
an eligible individual during the testing
period. the testing period begins with
the month in which the qualified HSA
funding distribution is contributed to the
HSA and ends on the last day of the
12th month following that month. For
example, if the distribution is made on
June 12, 2007, the testing period ends
on June 30, 2008. If you fail to remain
an eligible individual during this period,
other than because of death or
becoming disabled, you will have to
include the qualified HSA funding
distribution in income in the year in
which you fail to be an eligible
individual. This amount is also subject
to a 10% additional tax. (See Part III).

Line 13
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 13) from your actual contributions
(line 2). However, you can withdraw
some or all of your excess contributions
for 2007 and they will be treated as if
they had not been contributed if:
• You make the withdrawal by the due
date, including extensions, of your 2007
tax return (but see the Note below),
• You do not claim a deduction for the
amount of the withdrawn contributions,
and

• 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 you made a qualified HSA funding
distribution (line 10) during the tax year,
reduce your limitation (line 8) by that
distribution before you determine
whether you have excess employer
contributions. 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 2007 and
they will be treated as if they had not
been contributed if:
• You make the withdrawal by the due
date, including extensions, of your 2007
tax return (but see the Note below),
• You do not claim an exclusion from
income for the amount of the withdrawn
contributions, and
• 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).

Employer Contribution Worksheet
1.
2.
3.
4.
5.

Keep for Your Records

Enter the employer contributions reported in box 12 of Form W-2, with code W . . . . . . . . .
Enter employer contributions made in 2007 for tax year 2006 . . . . . . . . . . . . . . . . . . . . . .
Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter employer contributions made in 2008 for tax year 2007 . . . . . . . . . . . . . . . . . . . . . .
Employer contributions for 2007. Add lines 3 and 4. Enter here and on Form 8889, line 9

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Page 6 of 6

Instructions for Form 8889

12:42 - 17-SEP-2007

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Part II—HSA
Distributions
Line 14a
Enter the total distributions you
received in 2007 from all HSAs. These
amounts should be shown in box 1 of
Form 1099-SA.

Line 14b
Include on line 14b any distributions
you received in 2007 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 14a that were
withdrawn by the due date, including
extensions, of your return. See the
instructions for line 13 beginning on
page 4.

Line 15
Only include on line 15
distributions from your HSA that
CAUTION 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 15
distributions from all HSAs in 2007 that
were used for the qualified medical
expenses (see page 1) of:
1. Yourself and your spouse.
2. All dependents you claim on your
tax return.
3. Any person you could have
claimed as a dependent on your return
except that:
a. The person filed a joint return.
b. The person had gross income of
$3,400 or more.
c. You, or your spouse if filing
jointly, could be claimed as a
dependent on someone else’s return.

!

!

CAUTION

You cannot take a deduction on
Schedule A (Form 1040) for any
amount you include on line 15.

Lines 17a and 17b

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 —
• Dies,
• Becomes disabled (see page 2), or
• Turns age 65.
If any of the exceptions apply to any
of the distributions included on line 16,
check the box on line 17a. Enter on line
17b only 10% (.10) of any amount
included on line 16 that does not meet
any of the exceptions.
Example 1. You turned age 63 in
2007 and received a distribution from
an HSA that is included in income. Do
not check the box on line 17a because
you (the account beneficiary) did not
meet the age exception for the
distribution. Enter 10% of the amount
from line 16 on line 17b.
Example 2. You turned age 65 in
2007. You received distributions that
are included in income both before and
after you turned age 65. Check the box
on line 17a 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 17b, 10% of the amount of
these distributions included in line 16.

Part III—Income and
Additional Tax for
Failure to Maintain HDHP
Coverage
Use Part III to figure any income and
additional tax that must be reported on
Form 1040 or Form 1040NR for failure
to be an eligible individual during the
testing period for:
• A qualified HSA distribution (see
page 2),
• Part-year coverage (see Last-month
rule on page 1), and
• A Qualified HSA funding distribution
(see page 5).
See the discussions on the pages
indicated to determine the testing

Additional 10% Tax
HSA distributions included in income
(line 16) are subject to an additional

-6-

period for each of these items. Include
the amount in income in the year in
which you fail to be an eligible
individual.

Line 18
Enter the total of any qualified HSA
distribution.

Line 19
You can use the Line 3 Limitation Chart
and Worksheet in the Instructions for
Form 8889 for the year the contribution
was made to determine the contribution
you could have made if the last-month
rule did not apply. Enter the excess of
the amount contributed over the
redetermined amount on line 13.

Line 20
Enter the total of any qualified HSA
funding distribution.
Paperwork Reduction Act Notice.
We ask for the information on this form
to carry out the Internal Revenue laws
of the United States. You are required
to give us the information. We need it to
ensure that you are complying with
these laws and to allow us to figure and
collect the right amount of tax.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records
relating to a form or its instructions
must be retained as long as their
contents may become material in the
administration of any Internal Revenue
law. Generally, tax returns and return
information are confidential, as required
by section 6103.
The average time and expenses
required to complete and file this form
will vary depending on individual
circumstances. For the estimated
averages, see the instructions for your
income tax return.
If you have suggestions for making
this form simpler, we would be happy to
hear from you. See the instructions for
your income tax return.