I sold my home 7/2018 . It was my primary residence. It was not a rental/investment property. IRS just sent me a bill saying proceeds was income. What should I do now?

[Anonymous]

did you report the sale? did you specify that you lived in and owned it for any 2 out of 5 years before the date of sale?  was the gain more than $250,000 if single or $500,000 if married (assuming your spouse live in it for 2 years before sale).  the excess would be taxable. was there a previous sale of a principal residence within 2 years that you excluded the gain? the exemption would be less.

we can see your return or notice or closing documents so 

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[Opus 17]

If a 1099-S was issued, you needed to report the sale on a schedule D and form 8949 even though it was not taxable.

https://www.irs.gov/taxtopics/tc701

What I would do at this point is:

Prepare an amended 2018 tax return that includes the sale of the home.  In Turbotax, if you indicate that you qualify for the exclusion, Turbotax will say "you don't need to include this on your tax return unless you got a 1099-S" so make sure you say that you did.  Print the amended return, you should owe no tax.  Send the amended return to the IRS office that issued the notice, along with a letter of explanation giving your details and include copies of documents proving you qualify for the exclusion (owned more than 2 years, lived in it as your main home, etc.)

Possibly, Turbotax will not make an amended return if there is no change in the tax owed.  In that case, try and print just the form 8949 and schedule D showing zero taxable gains, and send them with your letter and proofs instead of the entire tax return.

Be sure to reply before any deadline in the letter, since if you miss the deadline, the tax becomes due and you lose your right to appeal.  Use a mailing service with tracking to prove when you mailed the letter and documents.