Individual taxpayers with a high deductible health insurance plan (HDHP) can use a Health Savings Account (HSA) to lower their taxes and cover some of their medical costs.

Contributions made by you personally, or by an employer, must be reported on IRS Form 8889 and included with your Form 1040. Distributions from an HSA are reported to the IRS on Form 1099SA. It is the taxpayer's responsibility to complete Form 8889 and report the total distributions and what amounts were used for qualified medical expenses.

In this example, we look at a singlefiling taxpayer with a high deductible health insurance plan (HDHP) and selfonly coverage. The taxpayer had contributions from his employer into his HSA (reported on Form W2 Box 12 Code W), and he made additional contributions of $750.

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