7 Steps to Take if You Receive an IRS Notice
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Have you ever gotten an IRS notice and felt a wave of panic wash over you? You are not alone. Those official envelopes can be pretty intimidating, but before you jump to conclusions, take time before making any decisions. Here are seven steps to help you understand an IRS notice calmly and efficiently.
Do Not Panic
When we receive an IRS notice, our first instinct is to feel anxious. However, if we let the panic take control, we make illogical and hasty decisions. We need to learn how to control our emotions when it comes to these situations. Stay calm in order to think clearly.
Review the Notice
When receiving an IRS notice, find out the reason they are contacting you. The notice explains the issue and outlines the actions you need to take. It contains either a balance due, a change to your refund, a question about your return, or a verification of your identity. Understand the issue to know what to expect.
Compare with Your Records
If the IRS notice mentions changes in your tax return, verify the information. Gather your original tax return and carefully scan what changes the IRS has made. Compare your copy to the IRs line by line. See if the difference is about:
- Income: Check if the IRS reported a different income amount compared to what you filed.
- Deductions and Credits: Notice if there are changes to the deductions or credits you received.
- Calculations: Ensure that the calculations on your return are similar on the notice.
Take Action if Required
After a thorough comparison of the copies, assess whether you agree or disagree with the IRS notice.
If You Agree with the Notice
The IRS notice provides specific actions for you to follow. If the IRS notice requires additional taxes, follow the payment instructions provided. If the notice requests additional documents, gather and submit them as the instruction states.
If You Disagree with the Notice
Understand exactly how the IRS notice is different from your copy. Collect any documents or relevant records that can support your claim. The IRS notice gives instructions on how to object to the changes. After this, clearly explain in a letter why you disagree. Take note of the deadline indicated on the notice to avoid further complications. If you are still unsure how to proceed due to complexity, consult a tax professional for assistance.
Keep Records
Keeping records allows you to easily review them if you receive any additional notice. In addition, compiling these documents greatly helps in preparing for future tax returns. This includes the IRS notice, original tax return, correspondence, supporting documents, and proof of payment.
Watch for Scams
As you follow these steps, always stay alert for scams when it comes to your taxes. Remember that the IRS does not contact taxpayers through email, text messages, or social media. They typically send out official letters by mail and follow up with a call.
- On the other hand, scammers pretend to be IRS agents. Scammers demand immediate payment and threaten you with arrest, deportation, or license revocation.
- If you receive a suspicious email, text, or social media message, do not respond or click on any links. Instead, report it immediately to the IRS.
Receiving an IRS notice can be a stressful experience. By understanding the process and taking the right steps, you can respond to this situation efficiently. Remember to stay calm, understand the notice thoroughly, compare your records, and take the necessary action.
Additionally, remember to keep all the records and be vigilant against scammers. If you are still confused on how to handle an IRS notice, seek professional help for guidance and consultation. Finances can be a tricky subject. To equip yourself with further knowledge, watch our video on “Money Mastery 101: Smart Money Management Tricks That Work Wonders.”
Key Takeaways
- Refrain from panicking when you receive an IRS notice. Take a deep breath and approach the situation calmly.
- Understand the reason for the notice and the specific actions required.
- Verify the information on the notice against your original tax return.
- If you agree with the notice, follow the instructions. If you disagree, gather evidence and respond accordingly.
- Be cautious of suspicious emails, texts, or calls claiming to be from the IRS. Report any suspicious activity immediately.
Internal Revenue Service. (n.d.). Topic No. 651 notices – What to do? U.S. Department of the Treasury. Retrieved September 4, 2024, from https://www.irs.gov/taxtopics/tc651
Internal Revenue Service. (n.d.). Understanding your IRS notice or letter. U.S. Department of the Treasury. Retrieved September 4, 2024, from https://www.irs.gov/individuals/understanding-your-irs-notice-or-letter
Internal Revenue Service. (2023, July 5). Got a letter or notice from the IRS? Here are the next steps. U.S. Department of the Treasury. Retrieved September 4, 2024, from https://www.irs.gov/newsroom/got-a-letter-or-notice-from-the-irs-here-are-the-next-steps
Internal Revenue Service. (2023, June 15). Dos and don’ts for taxpayers who get a letter or notice from the IRS. U.S. Department of the Treasury. Retrieved September 4, 2024, from https://www.irs.gov/newsroom/dos-and-donts-for-taxpayers-who-get-a-letter-or-notice-from-the-irs
Patriot Software. (2023, March 22). Don’t panic, it’s just the IRS. Patriot Software. Retrieved September 4, 2024, from https://www.patriotsoftware.com/blog/accounting/don-t-panic-it-s-just-the-irs/
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