What Happens in an HSA IRS Audit? Understand the Process and Requirements

Being subject to an HSA IRS audit can seem daunting, but understanding the process and requirements can help alleviate some of the stress. When the IRS audits your Health Savings Account (HSA), they are primarily looking to ensure that you have followed all the rules and regulations set forth by the IRS for HSAs.

During an HSA audit, the IRS may request documentation and information related to your contributions, withdrawals, and use of funds from your HSA. They will review these documents to verify that everything is in compliance with the IRS guidelines.

If you are selected for an HSA audit, here’s what you can expect:

• Notification from the IRS informing you of the audit and requesting specific documentation.
• Gather all the necessary documents, such as receipts, bills, and statements related to your HSA transactions.
• Respond to the IRS within the specified timeframe and provide any additional information they may request.
• Cooperate with the IRS auditor during the audit process.
• Receive a final determination from the IRS based on their review of the documentation provided.

It’s important to note that being selected for an HSA audit doesn’t necessarily mean that there was wrongdoing on your part. Sometimes audits are random or triggered by certain red flags in your HSA transactions.

As long as you have kept accurate records and followed the rules for HSAs, you should have nothing to worry about during an HSA IRS audit. If you do run into any issues during the audit, it’s best to seek guidance from a tax professional or financial advisor.

Facing an audit from the IRS regarding your Health Savings Account (HSA) may induce anxiety, but being informed about the audit process can significantly ease your worries. Essentially, the IRS conducts these audits to confirm adherence to established regulations for HSAs.