HSA New Jersey Tax Filing Checklist (2026) | HSA Tracker

Confirm you were covered by an HSA-eligible High-Deductible Health Plan (HDHP) on the first day of the month for which you contributed.

HSA eligibility is strictly tied to HDHP coverage. Not having one means your contributions are non-deductible and potentially subject to excise tax.

Verify your 2025 HDHP met minimum deductible requirements ($1,650 self-only; $3,300 family).

Your HDHP must meet specific IRS thresholds. Plans below these deductibles are not HSA-eligible, making your contributions invalid.

Ensure your 2025 HDHP did not exceed maximum out-of-pocket limits ($8,150 self-only; $16,300 family).

Exceeding these limits means your plan is not an HDHP, invalidating your HSA eligibility.

Check if you were enrolled in Medicare or another non-HDHP health plan (e.g., FSA, HRA) for any part of 2025 while contributing to your HSA.

Being covered by other disqualifying health coverage or Medicare makes you ineligible to contribute to an HSA.

Determine your maximum eligible HSA contribution for 2025 based on your coverage type (self-only: $4,300; family: $8,550).

Over-contributing can lead to a 6% excise tax penalty on the excess amount each year it remains in the account.

If age 55 or older in 2025, confirm you added the $1,000 catch-up contribution (if applicable) and were not enrolled in Medicare.

The catch-up contribution is a valuable benefit, but only available if you meet age and eligibility criteria, including not being on Medicare.

If married and both spouses have family HDHP coverage, ensure your combined 2025 contributions did not exceed the family limit ($8,550 plus any catch-up).

The IRS has a combined limit for married couples with family HDHP coverage, requiring careful coordination to avoid over-contribution.

Locate your Form W-2 for 2025 and check Box 12 for Code W, which indicates employer contributions to your HSA.

This code reports contributions made by your employer (or through payroll deductions) and is crucial for reconciling your total contributions.

Obtain Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA, from your HSA custodian.

This form details all distributions made from your HSA, which you must report on Form 8889 to prove they were for qualified medical expenses.

Retrieve Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, from your HSA custodian.

This form reports all contributions made to your HSA, including direct contributions and rollovers, helping you verify the total amount.

Compile detailed receipts and records for all medical expenses paid using HSA funds in 2025.

The IRS requires you to substantiate that HSA distributions were used for qualified medical expenses, especially in an audit scenario.

Keep records of any direct contributions you made to your HSA outside of payroll deductions.

These personal contributions are deductible on your federal tax return and must be accurately reported on Form 8889.

If you changed HSA providers, ensure you have documentation for any direct transfers or rollovers.

While generally not taxable, rollovers must be reported correctly on Form 8889 to avoid being mistakenly treated as taxable distributions.

Complete Part I of Form 8889 to calculate your allowable HSA deduction for 2025 contributions.

This section determines the amount you can deduct from your gross income on Schedule 1 (Form 1040), reducing your federal taxable income.

Enter your total HSA contributions (employer and personal) on Form 8889, ensuring it doesn't exceed your annual limit.

Accurate reporting of contributions is essential for claiming the correct deduction and avoiding over-contribution penalties.

Complete Part II of Form 8889 to report all distributions from your HSA and designate them as qualified medical expenses.

This section proves that your distributions were for eligible expenses, making them tax-free. Failure to do so can result in taxes and penalties.

If you had any excess contributions for 2025, complete Part III of Form 8889 to calculate and report the excise tax.

This ensures you correctly account for and pay the 6% excise tax on any contributions that exceeded your allowable limit.

If you moved funds between HSAs (trustee-to-trustee transfer or rollover), correctly report this on Form 8889.

While usually non-taxable, these transactions must be reported to avoid being flagged as taxable distributions.

Attach Form 8889 to your Form 1040 (or 1040-SR) when filing your federal income tax return.

Form 8889 is an integral part of your federal return; omitting it means your HSA activity is not properly reported to the IRS.

Do not claim an HSA contribution deduction on your New Jersey Gross Income Tax Return (Form NJ-1040).

New Jersey does not allow a state income tax deduction for HSA contributions, even though they are federally deductible. Claiming it will result in an incorrect state return.

Confirm that qualified distributions from your HSA for medical expenses are not subject to New Jersey state income tax.

Like federal rules, distributions used for qualified medical expenses are tax-free in New Jersey, ensuring you don't overpay state taxes.

Be aware that any non-qualified HSA distributions will be subject to New Jersey gross income tax, in addition to federal taxes and penalties.

Using HSA funds for non-medical purposes carries state tax implications in NJ, compounding the federal penalties.

Do not include HSA interest or investment earnings when calculating your New Jersey gross income.

Earnings within an HSA grow tax-free and are not included in New Jersey gross income, mirroring federal treatment for growth.

If your employer made contributions to your HSA through payroll, ensure these amounts are properly excluded from your New Jersey taxable wages on your W-2.

Employer contributions made pre-tax are generally excluded from both federal and state taxable wages, but it's good to verify for NJ.

Retain copies of all HSA-related tax forms (W-2, 1099-SA, 5498-SA, Form 8889) and supporting medical expense receipts for at least three years.

These documents are essential proof in case of an IRS or state audit, substantiating your contributions and tax-free distributions.

Review the 2026 HSA contribution limits (self-only: $4,400; family: $8,750) and HDHP thresholds ($1,700 deductible, $8,500 OOP self-only) for proactive planning.

Staying updated on the latest limits helps you plan your contributions for the current year, ensuring you maximize tax benefits without over-contributing.

Consider making your 2026 HSA contributions early in the year to allow more time for tax-free growth and investment.

Contributing early maximizes the time your funds have to grow through investments, potentially leading to greater long-term savings.

Explore investment options within your HSA, if available, to grow your savings for future healthcare costs, especially in retirement.

HSAs can function as a powerful retirement savings vehicle, offering triple tax advantages when invested, but many account holders don't utilize this feature.

If you are nearing age 55, plan to take advantage of the additional $1,000 catch-up contribution for 2026.

This extra contribution allows older individuals to significantly boost their HSA savings as they approach retirement, assuming they are not enrolled in Medicare.