Other HSA Distributions

Out of Scope HSA Distributions

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

• Deemed distributions from HSAs:
  • 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 program.