IRS flagged me for not reporting the sale of my home in 2018

[sam0627]

I used TurboTax Deluxe to file my 2018 taxes.  Also in 2018 I sold my home.

I just received a letter from the IRS saying I did not report the sale, and therefore there is a change to my taxable income.  So now the IRS says I owe thousands of dollars!

I checked my 2018 tax returns, and sure enough I do not see the sale.  First, I want to be clear, I did not intentionally avoid reporting it.  I must have just missed the question, or maybe went down a path of questions that did not include asking me.  In any case, I will correct whatever needs correcting.

Second, I thought my home sale profit would be excluded from taxable income because I lived in it (primary residence) from 2011 to 2018, I'm married and filed a joint return, and the profit did not exceed $500,000.

Any insight/advice would be greatly appreciated!

[xmasbaby0 · Accepted solution]

I RECEIVED A LETTER FROM THE IRS/STATE

TurboTax does not receive any information from the IRS or your state after your return was filed, so no one at TurboTax knows about a letter you received from the IRS or the state.

(what the letters from the IRS mean)

I GOT A LETTER FROM THE IRS   

https://ttlc.intuit.com/questions/3605673-i-got-a-letter-or-notice-from-the-irs

I AM BEING AUDITED

If you purchased Audit Defense:

https://ttlc.intuit.com/questions/2924451-i-bought-max-or-audit-defense-and-now-i-m-being-audited

AUDIT SUPPORT

TurboTax has a special phone number for help with IRS/state tax letters, which will be easier than going through regular Customer Support.   At the page below, click on the blue button that says "Get Help from TurboTax Support".  Then it will ask you what tax year is your letter.  Then it will ask you what the letter concerns. Then it will show you the phone number during posted business hours.

https://support.turbotax.intuit.com/irs-notice/audit-support/

[Mike9241]

did your spouse live in it for 2 years (730) days in the 5 years before the sale and your spouse did not exclude gain from another residence sale in the two years before this sale. if yes, you get the full $500K exclusion. the problem is you didn't report the sale showing the exclusion on your tax return.  if you paid for audit defense use it. otherwise amend 2018 showing the sale, cost, and indicate by answering the questions that you get the full exclusion. send the amended return with the notice and a letter of explanation to the address in the notice.  the letter should include an explanation somewhat like the following.  similar wording should be on the 1040-X. dear Sir or Madam: enclosed is form 1040-x with amended schedule d and form 8949.  the home sale qualifies for the maximum exclusion, so there is no taxable gain. Please adjust your records accordingly. sign and date the letter.  mail by a method where you can track it or get proof of delivery. 

[sam0627]

AUDIT SUPPORT phone number was very helpful.  They were able to connect to TurboTax running on my computer, and view my screen.  And they walked me through where to make the amendment.  Thanks!

[sam0627]

Your advise was inline with the TurboTax tax specialist told me.  Thanks!