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Employee
June 1, 2019
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CP2000 letter for HSA distribution, know what?

  • June 1, 2019
  • 1 reply
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I received a CP2000 letter from the IRS for an HSA distribution. Looking at my return I see that I did not enter the distribution which was for a qualifying expense. Should I amend my return, send them the HSA statements or hospital bills?
Best answer by dmertz

At a minimum, the IRS needs to receive a Form 8889 with Part II showing the distribution and the amount used for qualified medical expenses.  Without the Form 8889, the IRS assumes than none of the distribution was used for medical expenses.  Since Form 8889 does not have a place for your signature, you would typically need to provide this with Form 1040X as an amended tax return.  Although you typically do not need to provide medical-expense statements unless the IRS asks for them, you might contact the IRS as indicated in the CP2000 to confirm what they need to receive.

TurboTax automatically prepares Form 8889 Part II when you enter a Form 1099-SA and answer the follow-up questions.

1 reply

dmertzAnswer
Employee
June 1, 2019

At a minimum, the IRS needs to receive a Form 8889 with Part II showing the distribution and the amount used for qualified medical expenses.  Without the Form 8889, the IRS assumes than none of the distribution was used for medical expenses.  Since Form 8889 does not have a place for your signature, you would typically need to provide this with Form 1040X as an amended tax return.  Although you typically do not need to provide medical-expense statements unless the IRS asks for them, you might contact the IRS as indicated in the CP2000 to confirm what they need to receive.

TurboTax automatically prepares Form 8889 Part II when you enter a Form 1099-SA and answer the follow-up questions.

Employee
June 1, 2019
What is the proper procedure in response to a CP2000 in this regard?  File 1040X as an amended return or provide a written response to the CP2000 identifying the HSA distribution as funds used for medical expenses?