Tax season might end April 15th but that doesn’t mean it’s the last day you’ll be dealing with it. The IRS contacts about 10% of taxpayers in the form of a letter or notice in the months following. The majority of these notices will require the taxpayer to take action in order to correct an issue and get back on the IRS’ good side.
Below Are 3 Notices You Might Receive, Just When You Think The Tax Hassle Is Over.
- Refund hold/offset notice
If you file your taxes before April, it is likely you will get a refund. However, this refund might be withheld or offset if the IRS suspects your return is fraudulent or for other reasons such as filing an overdue tax return from another year.
If there is an outstanding tax debt, the IRS can take your refund and put it toward non-tax obligations such as student loans or overdue child support. This should be taken care of ASAP in order to prevent the same situation from occurring the following year.
- Past due/ Collections notices
Out of the 30 million taxpayers who owe a balance when they file their returns, 4-5 million cannot pay the full amount right away. It is crucial to set up a payment plan with the IRS to avoid their ongoing notices throughout summer.
Avoid ignorning these notices as they will lead up to liens and levys.
- Underreporter notices
The IRS is constantly reviewing returns to ensure all income is reported by the taxpayer. If there is a mismatch between income and tax information statements, the IRS can send you a CP2000. This notice shows missing items and errors which can propose an average of over $1600 additional tax owed.
In additional to the tax owed, you will have to pay an additional 20% accuracy penalty. The only way out of this is to provide proof to the IRS that you made a reasonable attempt to report all your income.
Taxes can seriously be a summer bummer. Putting off IRS notices will only have you paying more in the long run. To avoid the IRS causing stress to your summer, enlist a tax professional to assist. If you’re in the Orange County area, EA Tax Solutions is your go to for affordable, quality tax assistance.