Form 8889, Part III

There are consequences when a taxpayer fails to maintain HDHP coverage. Form 8889, Part III, Income and Additional Tax for Failure to Maintain HDHP Coverage, is used to figure any income and additional tax that must be reported on Form 1040 for failure to be an eligible individual during the testing period for:

• A qualified HSA distribution (see Form 8889 Instructions, page 2)
• Last-month rule (see Form 8889 Instructions, page 1)
• A qualified HSA funding distribution (see Form 8889 Instructions, page 5)

See the discussions on the pages indicated and refer affected taxpayers to a professional tax preparer. This information is provided for your awareness. Form 8889, Part III, is out of scope for the VITA/TCE program.