Gather your records for the tax year including records showing how much you and your employer contributed to your FSA as well as how much you withdrew. You will also need any records showing what medical expenses you paid with the funds from the withdrawals.
Determine the amount of payments that were made from the account for qualified medical expenses. As a rule, qualified medical expenses are unreimbursed medical expenses that could be deducted on Schedule A.
Fill out Part I of Form 8889 with any contributions made by you or your employer to your FSA. Complete Part II if any distributions were made from your FSA. Complete Part III if you failed to meet the qualified individual test during any part of the testing period. Specific instructions and definitions can be found on the Internal Revenue Service website.
Transfer the amounts from Form 8889 to your 1040 federal tax return.
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