Using HSA receipts

[mpeirce]

I see mention of "using my receipts when I get money out of my HSA". I realize that the receipts are the proof that you spent money on valid medical expenses back in 2011 (or whenever). I keep all my receipts for later reimbursement too.

My question though is has anyone actually done this. And if so, has anyone ever had the IRS want to see the actual receipts?

[gwraigty]

We reimburse ourselves from DH's employer HSA in a lump sum early in the year for medical expenses we paid the previous year. I put the receipts in the applicable tax folder. We've never been audited by the IRS.

[candrew]

We keep an annual spreadsheet to record qualified HSA expenses that includes dates, amounts paid, provider names and what the expenses entailed. We pay all of our medical expenses using CC's and don't keep the paper receipts. Never been audited.

[audreyh1]

Quote:

Originally Posted by mpeirce I see mention of "using my receipts when I get money out of my HSA". I realize that the receipts are the proof that you spent money on valid medical expenses back in 2011 (or whenever). I keep all my receipts for later reimbursement too. My question though is has anyone actually done this. And if so, has anyone ever had the IRS want to see the actual receipts?

I think you would only have to show the receipts if you were audited. So keep the claimed ones with your filed tax returns until past the date of possible audit.

[pb4uski]

Quote:

Originally Posted by mpeirce I see mention of "using my receipts when I get money out of my HSA". I realize that the receipts are the proof that you spent money on valid medical expenses back in 2011 (or whenever). I keep all my receipts for later reimbursement too. My question though is has anyone actually done this. And if so, has anyone ever had the IRS want to see the actual receipts?

I did it recently for 2010-2019. I had Quicken records of our medical costs from 2010 to 2019, EOBs for all those years and many receipts (but not for all EOB amounts due). In some cases where I had negotiated a discount with the provider/hospital for an additional discount for immediate payment I used that lower amount that I actually paid rather than the EOB. Total was about $18k so about $2k a year.

I have a 1-2" thick file of a memo, Excel printout and EOBs and receipts in case the IRS ever asks.... but I doubt that they ever will... I think they have bigger fish to fry.

[travelover]

Like others, I keep a spread sheet and staple the receipts to it whenever I make a withdrawal. If in the unlikely case the IRS wants proof, I'll go through it with them. They seem to have bigger fish to fry, though, so I'm not overly concerned.

[Cobra9777]

I also have a spreadsheet with out-of-pocket medical/dental/vision/prescription expenses going back to 2008 when I first started the HDHP and HSA. The spreadsheet has basic data like date, provider, patient, description, and amount.

In my closet, is a box with all the receipts in the same order as they were entered on the spreadsheet. The receipts include both the invoice and proof of payment, usually a credit card receipt. I remember reading some IRS guidance that said you need both if audited.

I've taken no actual distributions yet. But after 65, the plan is to withdraw whatever amount we want for whatever purpose. Then use the spreadsheet to find a block of receipts that support that amount, probably on a FIFO basis. Then find the corresponding physical receipts in the box and file them away with that year's tax return.

DW has been trained on how this works. It's also written up in a Word document in case she forgets.

[pb4uski]

^^^ you have what I would have in an ideal world.... but I think what I have is enough, albeit less than perfect evidence of the expenses.

[Midpack]

I've just kept all the CC receipts for every medical expense we've charged, and the annual statement for the CC. No one has ever asked for proof, but I'll keep the file for at least 7 years. It's taken 9 years, but we just spent the last $38.01 remaining in our HSA account, so it's no more...

[Keim]

Quote:

Originally Posted by mpeirce I see mention of "using my receipts when I get money out of my HSA". I realize that the receipts are the proof that you spent money on valid medical expenses back in 2011 (or whenever). I keep all my receipts for later reimbursement too. My question though is has anyone actually done this. And if so, has anyone ever had the IRS want to see the actual receipts?

Yes, I have. Yes, they did.

I was NOT fully audited. They just asked for the proof on this particular issue. I sent the receipts along with a note documenting the use of the money. No more questions asked.

Just did it again last month. Hopefully that won't trigger any IRS interest.

[kaneohe]

If you like to worry, don't forget that you will need all your relevant tax returns to show that you never took a medical deduction , or if you did that you never used any of those receipts either for the 7.5% floor or for the rest of the medical deduction previously.

If you are one of those HSA "hoarders" that save up receipts for decades, this means all your tax returns for those years.

[easysurfer]

I keep all the receipts in a couple of folders in a filing cabinet. One folder contains the receipts I've reimbursed myself for. I reimburse each January for the prior year's qualified expenses and use one of those hefty black paper clips to clamp down the receipts for that year. The other folder contains receipts for expenses not yet reimbursed.

I also have a spreadsheet showing the history by year.

Have not been audited.

[pb4uski]

Quote:

Originally Posted by kaneohe If you like to worry, don't forget that you will need all your relevant tax returns to show that you never took a medical deduction , or if you did that you never used any of those receipts either for the 7.5% floor or for the rest of the medical deduction previously. If you are one of those HSA "hoarders" that save up receipts for decades, this means all your tax returns for those years.

Fair point, but the IRS already has those returns and the Schedule A's. FWIW, I've never exceeded the floor so never benefited from the medical deduction.

[kaneohe]

Quote:

Originally Posted by pb4uski Fair point, but the IRS already has those returns and the Schedule A's. FWIW, I've never exceeded the floor so never benefited from the medical deduction.

Assuming their storage/filing systems are as you hope, they would know if you claimed the medical deduction if they bothered to look (tho not so sure their systems would have the hoarder's data back decades). However if you did take the medical deduction , they would not know what specific medical bills you had already used for them or if you were claiming them again for the HSA.

Probably they would not ask unless they got up on the wrong side of the bed that day or taxpayer provoked them but just to be sure.............

[Montecfo]

Quote:

Originally Posted by Keim Yes, I have. Yes, they did. I was NOT fully audited. They just asked for the proof on this particular issue. I sent the receipts along with a note documenting the use of the money. No more questions asked. Just did it again last month. Hopefully that won't trigger any IRS interest.

Can you share what proof you offered? It can range from lists of medical expenses from quicken, to original bills with credit card receipts attached, to insurance EOBs, etc.

Or ONLY insurance EOBs.

Just wonder what you presented that was accepted (thought clearly that could vary depending on the particular IRS agent).

[Montecfo]

Quote:

Originally Posted by kaneohe If you like to worry, don't forget that you will need all your relevant tax returns to show that you never took a medical deduction , or if you did that you never used any of those receipts either for the 7.5% floor or for the rest of the medical deduction previously. If you are one of those HSA "hoarders" that save up receipts for decades, this means all your tax returns for those years.

HSAs began in 2003 so the history is actually not that long. Obviously you do have to be organized to do this but I have all my tax returns from those periods, so that would not be a large concern.

[Keim]

Copies of the cashed in receipts. And an explanatory note detailing condition they were treating.

[audreyh1]

Quote:

Originally Posted by Keim Copies of the cashed in receipts. And an explanatory note detailing condition they were treating.

Why would they need to know the condition being treated? It’s just whether it’s a qualified expense.

[Montecfo]

Quote:

Originally Posted by Keim Copies of the cashed in receipts. And an explanatory note detailing condition they were treating.

EOBs? Credit card statements? Cancelled checks?

Just curious what worked.

[Keim]

I literally photocopied the receipts I'd been holding.