Receiving a letter from the IRS can be a daunting experience, but it’s important to remember that not all letters are bad news. In fact, many letters are simply informational or request additional information as the IRS may need verification in order to process your tax return. Here are some common reasons why the IRS might send a letter.
- You owe taxes: One of the most common reasons for receiving a letter from the IRS is that you owe taxes. The letter will typically include information about the amount owed, as well as instructions for how to pay it.
- You made an error on your tax return: Another reason you might receive a letter from the IRS is that you made a mistake on your tax return (or the IRS’s records do not match your own records). The letter will typically explain what the mistake was and provide instructions for how to correct it or what changes the IRS has made.
- You’re being audited: If the IRS decides to audit your tax return, you’ll receive a letter notifying you of the audit. The letter will typically request additional documentation or information to support the items on your tax return.
- Your identity needs verification or there is a risk of ID theft. Sometimes the IRS just wants to verify the actual taxpayer has filed the return and the IRS will provide an explanation for how to contact the IRS. Be sure to check this is a legitimate form from the IRS as there have been situations where fraudsters have created forms (that look like a real IRS form) in order to steal taxpayer information.
- You are eligible for a refund: Finally, it’s possible to receive a letter from the IRS notifying you that you’re eligible for a refund. The letter will typically provide information about the amount of the refund and the process for claiming it.
Regardless of the reason for receiving a letter from the IRS, it’s important to take the letter seriously and respond promptly and double check what was done… as not all letters are correct. The IRS does make mistakes, but not very often. If you are unsure about how to proceed, consider reaching out to a tax professional for guidance or contact us.
Disclaimer: This information has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors or consult us regarding your own personal tax situation as this article was intended to be general in nature.