Drake Tax - 1040 - Death of HSA Account Beneficiary

If the account beneficiary has a surviving spouse who is the designated beneficiary, as per the 8889 Instructions the spouse would treat the HSA as if they were the account beneficiary. The surviving spouse will complete the 8889 as though it belonged to him or her.

If the designated beneficiary is not the account beneficiary's surviving spouse, or there is no designated beneficiary, then the account ceases to be an HSA as of the date of death. As per the 8889 instructions, the beneficiary completes the form as follows:

• Select the Death of Account Beneficiary - Not Surviving Spouse check box in the lower left corner of screen 8889. This will produce the literal "Death of Account Beneficiary" across the top of the form.

  Note  This will disable e-filing and the return will have to be paper filed in this circumstance.

• On Part II, line 14a, enter the fair market value of the HSA as of the date of death.

• On Part II, line 15, for a beneficiary other than the estate, enter qualified medical expenses incurred by the account beneficiary before the date of death that the beneficiary paid within 1 year after the date of death.

• Complete the rest of Part II.