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

Health Savings Accounts (HSA)

Summary and Exercises

Practice Exercises

James and Diana Calhoun Scenario 3

Taxpayer Documents:

Click here to see the Calhouns' Form 13614-C, Intake/Interview Sheet.

Click here to see James and Diana's Forms W-2.

Click here to see the Calhouns' Form 5498-SA.

Click here to see Diana Calhouns' Form 1099-SA.

Directions: Use the interview notes and taxpayer documents to complete this practice exercise. Complete Form 1040 and the appropriate forms and schedules, to answer the following questions.

For practice using the tax preparation software, complete this scenario using the Practice Lab on Link & Learn Taxes.

Interview Notes

  • James and Diana Calhoun want to file a joint tax return.
  • Diana is enrolled in an HDHP with family coverage. She has an HSA through her employer. As part of her benefit program, the employer contributed $1,000 to her HSA during the year. In addition, Diana made a contribution of $2,000.
  • James and Diana have no other health insurance.
  • Diana received a distribution from her HSA of $1,900.
  • James and Diana did not itemize last year and do not plan to itemize this year.
  • Diana checked the unsure box on Part III, question covering other income on the intake and interview sheet, since she is not sure she has to include the HSA distribution in her income.

  • Medical bills for James:
    Over-the-counter medication (no prescription) $400
    Unreimbursed doctor bills 300
    Unreimbursed expense for eyeglasses (needed for medical reasons) 425
    Unreimbursed prescription drugs 657

    Medical bills for Diana:
    HDHP insurance premium $1,500
    Unreimbursed doctor bills 195
    Unreimbursed prescription drugs 128
    Unreimbursed lab work (routine blood tests) 250

Question 1

The HSA deduction on the Calhouns' tax return is:


Question 2

What is the total, unreimbursed, qualified medical expenses on Form 8889, Part II?


Question 3

Did the Calhouns receive distributions in excess of their unreimbursed qualified medical expenses?