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Tax Information

First Horizon Msaver is providing the following information as a quick refrence guide and does not intend to provide tax or legal advice. Consult with your legal advisor for complete information.

Regulations

Individuals cannot take a federal income tax deduction for HDHP premiums. All personal contributions to an HSA offer an "above-the-line" deduction, allowing a reduction in taxable income by the amount contributed to an HSA. Individuals do not have to itemize deductions to benefit. Pre-tax contributions can be made by an employer that offers a "salary reduction" plan (also known as a Section 125 plan or a cafeteria plan). These contributions can be made on a pre-tax basis (before income taxes and FICA taxes). If an individual's employer makes pre-tax contributions, the individual cannot take the "above-the-line" deduction.

Some basic information regarding taxation and HSA Accounts:

• Tax filing status (joint v. separate) does not affect contribution
• Employer contributions are treated as employer-provided coverage for medical expenses under an accident or health plan and are excludable from employee's gross income
• Employer contributions not subject to Federal Insurance Contributions Act (FICA), the Federal Unemployment Tax Act (FUTA), or the Railroad Retirement Tax Act
• Employer contributions in excess of limits will be included in employee's gross income and is subject to 6% excise tax
• Self-employed
• Cannot make pre-tax contribution, but can take the "above-the-line" deduction on personal income taxes

Forms

Individual Tax Return

8889

• Individual must attach IRS Form 8889 for HSA contributions to his/her IRS Form 1040

Bank Forms

1099-SA

• Sent to individuals on or before January 31st to show total distributions from an HSA

5498-SA

• Sent to individuals on or before May 31st to show his/her contributions for the tax year and the value of the HSA.

The following states do not permit personal income tax breaks for HSA contributions:

• Alabama, California, New Jersey, and Wisconsin

Federal tax exemptions, however, still apply. Consequently, if an individual had pre-tax payroll contributions, he or she would not claim those contributions on his or her federal income tax return, but he/she would add the amount of contributions "back in" when figuring the state income tax return. Following that same train of thought, if the individual made a post-tax contribution, he or she would deduct that from his/her income on the federal income tax return, but could not deduct that same contribution on the state income tax return.

First Horizon does not offer tax or legal advice. You are advised to consult your personal tax advisor.