Utility bill, birthday card from grandma with a five-dollar bill enclosed, credit card solicitation, credit card bill, pizza coupons, and something from… THE INTERNAL REVENUE SERVICE!?! Suddenly cheap pizza doesn’t sound so good and Grandma’s thoughtful gesture is laughable at best. Before you go writing off pizza and your sweet old grandma, take a deep breath and remember your friends at Bookly.
Today’s post will put you at ease the next time you receive unexpected mail from the IRS. The IRS literally mails out millions of letters and notices to taxpayers each year. Yet, most correspondences sent will fall under one of the following general areas:
You owe the IRS money:
Notices saying that you owe the IRS money are really the only dreadful ones. Some of the most common causes resulting in tax debts include: failure to have enough taxes deducted from your wages, miscalculations on return, failure to report all income sources, failure to meet minimum contributions paid into IRA/retirement accounts. Luckily, the IRS is willing to work with you on repaying any tax debts.
The IRS owes you money:
It sounds sweet when you first receive notice that the IRS actually owes you money for a change. It feels even better when you receive that check to make it a reality. There are a number of reasons for the IRS to issue a refund. Overpayment, miscalculations (in your favor), and unclaimed credits are some of the most common. The IRS will always notify you of the pending refund via mail before issuing a check. The wait time from notice to payment is typically around six weeks.
Requests for additional information are sent more frequently than notices indicating a balance due or owed.
Typically, additional information is needed because information on tax returns either did not match IRS records or was missing altogether. This is a common occurrence amongst taxpayers who attempt to file their returns without assistance from a tax professional. The IRS may also request additional information to verify qualifications for certain credits. For example, if you received a tax credit for a house you purchased, you may need to file a certain form or provide more information about it. For example, proof of residency may be requested for any disaster-relief credits issued.
Notifications indicating a change or updates made to a tax account make up the bulk of correspondences mailed from the IRS to taxpayers.
The IRS will usually attempt to correct any miscalculations as well as other common issues on your filed return if at all possible. They will then mail you a letter notifying you of the corrections made. Should you receive such correspondence, carefully compare their changes with your records, and if you agree with the notice, you usually do not need to reply unless it states otherwise. However, if you do not agree with the notice, it’s important for you to respond. You should write a letter to explain why you disagree. Include any information and documents you want the IRS to consider. Mail your reply with the bottom tear-off portion of the notice.Send it to the address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.
Key takeaways: Don’t go bananas the second you realize there’s something from the IRS in that stack of mail. Read everything carefully. Follow directions and deadlines precisely. Keep all correspondences and filed returns somewhere safe and contact a tax professional like Bookly for additional assistance or questions about a letter or notice received from the IRS.