Use Form 8853 to report distributions from Archer MSAs and long-term care insurance contracts

What is Form 8853?

You can use Form 8853 to report contributions (including employer contributions) to, and deductions from, Archer MSAs, which are medical savings accounts (MSAs) for certain self-employed people and their employees. You can also use Form 8853 to report distributions from Archer or Medicare Advantage MSAs, taxable payments from long-term care contracts, and taxable accelerated death benefits from life insurance policies.

You must file Form 8853 if any contributions were made to an Archer MSA, even if your employer made the only contributions. If you made contributions to your spouse's Archer MSA, but your spouse did not, you still have to file Form 8853.

If you or your spouse acquired an interest in an Archer MSA due to the account holder's death, report this transaction on Form 8853.

MSA contributions and deductions

If you are filling out Form 8853 as a married couple filing jointly, you may need two separate forms, because each spouse needs to fill out Part I separately if both are enrolled in a high-deductible health plan with self-only coverage (not family coverage).

If your employer contributed to your Archer MSA, report their total contributions on Line 1.

Report your contributions for the tax year on Line 2, and do not include rollovers.

For Line 3, fill out the limitation worksheet on Page 3 of the Form 8853 instructions. This limitation is based on:

• The kind of healthcare coverage you have (self-only or family coverage)
• The deductible for the coverage
• Filing status
• Which months you were enrolled in Medicare, if any

You must account for all 12 months of the year on the worksheet.

Enter compensation on Line 4. Generally, this is reported on Form W-2 from the employer who provides the high-deductible health plan, but it can also be net profit from self-employment income, minus one-half of self-employment tax, if your business established the high-deductible health plan.

On Line 5, enter the smallest amount from Lines 2, 3, or 4, then carry that amount to Schedule 1 of Form 1040. If Line 2 is more than Line 5, you or your employer made excessive contributions to an Archer MSA, and you may owe additional taxes.

Sections A and B: Archer MSA and Medicare Advantage MSA distributions

Report MSA distributions on Line 6a, and rollovers on Line 6b, then net them on Line 6c.

If you used any distributions for qualified medical expenses, enter them on Line 7. This includes medical expenses for yourself, your spouse, dependents, and anyone who could've been your dependent except they had gross income of $4,700 or more, or filed a joint tax return.

If the net MSA distributions on Line 6c are more than your qualified medical expenses, report the taxable portion on Line 8 and carry it to Schedule 1.

Check Box 9a to be exempted from the 20% additional tax on MSA distributions if they were made after the date of the account holder's death, becoming permanently disabled, or turning 65. If any distributions are not exempt, enter 20% of the Line 8 amount on Line 9b and carry that amount to Schedule 2 of Form 1040.

Compute Section B similarly. The differences are:

• It is for Medicare Advantage MSA distributions.
• The additional tax on non-exempt distributions is 50%.
• Age is not a factor.

Section C: Long-term care contracts

Enter the name and Social Security number of the person covered under long-term care insurance on Line 14.

Lines 15 and 16 specify whether payments were received on a periodic or per diem basis, and whether the insured was terminally ill. Terminally ill recipients never have taxable payments, so you would enter $0 on Line 26.

If the insurance contract was nonqualified, and the recipient was not terminally ill, you should not use this form to compute the taxable portion of the payments. Instead, report the payments directly on Schedule 1.

Report the amounts of qualified payments on Line 18. Report all other amounts from Form 1099-LTC on Line 17, and report accelerated death benefits on line 19.

On Line 21, multiply the number of days the insured received long-term care services by $380. Enter long-term care costs for the insured on Line 22. Enter the larger of the two amounts on Line 23.

If the insured received any reimbursements in the coverage period, enter them on Line 24. Compute the per diem limitation by subtracting this number from the amount on Line 23, then report it on Line 25.

Net the total taxable amount on Line 26 and carry it to Schedule 1 of Form 1040.

Confused? We can help. A Jackson Hewitt Tax Pro can explain this form and help you fill it out, with any supporting documentation or calculations you may need. Taxes can be complicated, but you are not on your own. Contact us today.

About the Author

Mark Steber is Senior Vice President and Chief Tax Information Officer for Jackson Hewitt. With over 30 years of experience, he oversees tax service delivery, quality assurance and tax law adherence. Mark is Jackson Hewitt’s national spokesperson and liaison to the Internal Revenue Service and other government authorities. He is a Certified Public Accountant (CPA), holds registrations in Alabama and Georgia, and is an expert on consumer income taxes including electronic tax and tax data protection.

More about Mark Steber Our Editorial Policy