How long do I have to hold on to qualified HSA medical expense receipts ? I have tried finding the answer to this question on IRS and also google it but i canít find a exact answer. What i have found out is "you should save your qualified medical expense receipts in case of IRS audit" but what i donít understand how long after tax return is approved and processed by IRS , i still need to hold on to those HSA receipts. Right now i have last 3 year receipts ( since 2008) and in process of filing my 2010 tax return. Please let me know if you know the answer to my question or point me to an irs publication which does have a answer.
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Senior Member - 5K
posted: Jan. 14, 2011 @ 7:46a
If the IRS accuses you of Fraud, they can go back indefinitely.
I'm not saying that they will accuse you of Fraud, but they have been know to make mistakes. It would suck to be accused and not have any documentation to support your position. Hence, I save everything electronically with no plans for deleting anything.
Don't get me wrong, the possibility of being accused is extremely low, but people win the lottery every week, so I figure why chance it.
Senior Member - 1K
posted: Jan. 14, 2011 @ 9:06a
Save up all the paper receipts over a year. Then take them to work or wherever you have a high-speed scanner that can stack them all into one file. Scan the pile of receipts to a file then shred them. Repeat each year, until you reach age 65 and become eligible for penalty-free distributions.
posted: Jan. 14, 2011 @ 10:14a
You have to be prepared to keep upgrading the digital file every few years... Lets see in 20 years we went from magnetic tape, 3.5" and 2.5" floppies, zip drives and keys, CD, DVD, (blue ray???) and external hard drive to name a few
Senior Member - 4K
posted: Jan. 14, 2011 @ 11:22a
gatzdon said: If the IRS accuses you of Fraud, they can go back indefinitely.It would be hard for the IRS to make the case that excluding HSA distributions from earnings on a tax return was tax fraud. And even the IRS doesn't have the resources to make the case against every taxpayer.
Generally, the IRS is limited by taxplannercpa said: 3 years after the due date of your return for the year being examined, or the Date on which you actually mailed your return for the year, whichever is later. If, however, your tax return underreported income by 25% or more, the statute of limitations is 5 years, and if the tax return is fraudulent then there is no statute of limitations.)http://www.taxplannercpa.com/irs-problems-notice-of-audit.php
Senior Member - 2K
posted: Jan. 14, 2011 @ 2:08p
How reliable is that source (or has the IRS changed rules recently)? I seem to recall the timeframes to be 3 & 6 years, not 3 & 5 years
Senior Member - 1K
posted: Jan. 14, 2011 @ 5:52p
You should keep the receipt inforamtion indefinitely until your HSA account is liquidated. I think the fraud (or tax avoidance) inference will most likely apply if you have a very large balance in the account and begin to withdraw large amounts out of it when compared to your other income information on your return. You have to file Form 8889 every year when you take out money from the HSA (even if you don't have to report any other income), so they are tracking your account activity from conception (opening) to death (closing) of the HSA.
posted: Jan. 14, 2011 @ 6:17p
USrules said: You have to be prepared to keep upgrading the digital file every few years... Lets see in 20 years we went from magnetic tape, 3.5" and 2.5" floppies, zip drives and keys, CD, DVD, (blue ray???) and external hard drive to name a few
Oh the days of loading the operating system from paper tape ....
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