Form-1099sa | Meaning and Definition

What is a 1099–sa?

A 1099-sa is essentially a tax form required by the US Internal Revenue System (IRS). It is to be filled when filing taxes to inform the IRS how much expenditure an individual has incurred in medical procedures. This form contains details about expense distributions made from an individual’s Health Savings Account (HSA), Archer Medical Savings Account (Archer MSA), or Medicare Advantage Medical Savings Account (MA MSA). The list of approved expenses is provided, and if an individual incurs an expense outside of this list, that will be taxable at the rate of 20%. All expenses made within the purview of approved expenditures are tax-free.

How to avoid getting taxed for these expenses?

In the simplest of terms, these accounts are designated for medical expenses only in the simplest of terms. It is important to ensure that medical costs are the only expenses one uses the distribution amounts for. Other expenses must be avoided to save on taxes. There is no other way to avoid taxes on the expenses made through these accounts, so using the disbursed amounts wisely is advised.

Why is a 1099-sa important?

Now that you have learned what is a 1099-sa form, it is vital to know why it is important. When individuals incur a medical expense, their Health Savings Account provider will provide them with a 1099-sa form. This form is essential in the income tax filing process because it helps save taxes. This is used to determine what medical expenses the amount has been disbursed. It comes in handy during the tax filing process as individuals can track which of their expenses are being taxed at the rate of 20% and which ones are tax-free because they fall within the list of approved expenses from this account.