Image source: Getty Images
So you submitted your tax return and heaved a big sigh of relief at having one unpleasant task in your life done with. But what if, weeks later, there’s now a notice from the IRS sitting in your mailbox called a CP2000?
At first, a CP2000 notice might seem like an audit — but it’s not. It’s merely a notice from the IRS indicating that the information you entered on your tax return doesn’t match the agency’s records. And so while there’s no need to panic, you also shouldn’t ignore your CP2000 notice either.
Generally, when the IRS issues a CP2000 notice, it’s because it’s seeing information on your tax return that doesn’t align with the information third parties have reported to it. As an example, let’s say you reported $452 in interest income from your savings account. The IRS might have a 1099 form on file saying you actually received $521 in interest.
So maybe you just made an error copying over the number in your tax software, or you entered a number from a different form instead. The IRS isn’t necessarily going to rush to accuse you of tax fraud or intentionally underreporting income. But in this example, what’ll generally happen is that the IRS will propose an adjustment to your tax return based on the information it has.
If you agree, you fill out the notice and send it back. If you don’t agree, you’ll generally need to provide proof (like the original document) to back up your claim that the original amount you entered is correct.
Either way, it’s important to read your CP2000 notice carefully so you understand exactly what it’s about and exactly what information the IRS is asking of you. It’s also important to send back your response as per the instructions provided by the IRS.
Generally, the IRS cannot finish processing your tax return until it receives your response to a CP2000 notice. So if you’re waiting on a tax refund, sitting on that notice might delay that money from hitting your bank account.
You might assume that a CP2000 notice is going to tell you that you messed up and you now owe the IRS more tax. But actually, a CP2000 notice has the potential to work in your favor. The IRS might send you a notice saying that you overstated your income rather than understated it, in which case you may be due a larger refund.
That’s why you shouldn’t flip out if one of these notices shows up at your door. Instead, figure out how to respond and then send in your response as quickly as possible.
Remember, if you agree with the proposed changes on your CP2000 notice, all you really need to do is sign it and send it back. There’s little work involved. There may be more to do on your part if you don’t agree with the proposed changes, but even so, a little effort could help the IRS get the clarity it needs to process your return and get your refund into your pocket.
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.
—
Blog powered by G6
Disclaimer! A guest author has made this post. G6 has not checked the post. its content and attachments and under no circumstances will G6 be held responsible or liable in any way for any claims, damages, losses, expenses, costs or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material on this website, even if the G6 has been advised of the possibility of such damages in advance.
For any inquiries, please contact [email protected]
