What is Form 8889 used for?

Form 8889 is specifically designed for reporting contributions to and distributions from Health Savings Accounts (HSAs). This form is crucial for individuals who have an HSA, as it allows them to declare how much they have contributed to the account throughout the tax year and any distributions they took from the account, including qualifying medical expenses. By accurately completing this form, taxpayers can determine their eligibility for tax deductions related to those contributions and assess any taxable distributions.

Using Form 8889 also enables account holders to reflect any adjustments, track contributions, and ensure compliance with HSA regulations. It's important because HSAs offer tax advantages, such as tax deductions on contributions, tax-free growth of account assets, and tax-free withdrawals for qualified medical expenses. Having a dedicated form helps in maintaining clear records that could be audited by the IRS.

The other options do not align with the purpose of Form 8889. Capital gains and losses are reported on different forms, health insurance deductions are typically claimed on Schedule A or on Form 1040, and retirement account distributions are reported on forms like 1099-R rather than Form 8889.