If you receive an IRS notice stating that you owe money – don’t panic – you may not necessarily owe the IRS anything. The IRS manually enters some tax data into their computer system. Sometimes people make mistakes, after all we’re only human (I know I do – this is why we always double-check and sometimes triple-check our work.)
So far, two of our clients have received IRS Notices stating that they owe money for their 2013 taxes. The first client forgot to provide us with a 1099-MISC for money that they withdrew early from their retirement IRA (the married couple are in their ’30s and just had a child).
The second client received an IRS Notice stating that they did not report $45K of 1099-MISC Income and now owe taxes, interest and penalties. We have a copy of the 1099. The client received $4,500. Clearly, the individual entered an extra zero into the IRS computer system.
Do you have any stories to share?