Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Health Savings Accounts (HSA)

Distributions from an HSA

Other HSA Distributions

Out of Scope HSA Distributions

The following are out of scope for the VITA/TCE programs. The information is provided for awareness purposes only. Taxpayers with these issues should be referred to a professional tax preparer.

  • Deemed distributions from an HSA:
    • Engaging in prohibited transactions; see Publication 969 for details
    • Using an HSA as security for a loan

A taxpayer cannot claim the health coverage tax credit for premiums paid with a tax-free distribution from an HSA.

As covered in the Payments lesson of the Basic course, Form 8885, Health Coverage Tax Credit, is out of scope for the VITA/TCE programs.