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Ask Dave

Filed It Wrong!

BJ ran into a snafu with his health savings account and the IRS, but Dave thinks it's something that's easily fixed.

QUESTION: BJ got a letter from the Internal Revenue Service. A couple of years ago, they paid for his wife’s surgery through a health savings account. Now they say he owes on the distribution. Dave asks one question to figure out that this is easier fixed than BJ thinks.

ANSWER: If you paid directly out of health savings accounts from a checkbook to a medical provider, then you just need to prove to them that’s what happened. It is tax free, they just don’t have notification or proof that it was a medical event and think you just paid it out to yourself. They are incompetent most of the time, so you have to teach them.

You may want to get a certified public accountant to help you with this, because I’m not a tax person and can’t tell you how to do it. I suspect there is a methodology that the IRS is going to want to see. They’ll want to have some proof that this happened instead of just a letter from your doctor. You need to fill out a form and meet certain guidelines. You need to prove to them through their process. This will be tax free when you get this cleared up!