In 2021, the tax season was extended until May 17th, 2021. By the summer months, most tax filers that have submitted their 2020 Tax Return have already been processed by the IRS or are awaiting processing unless an extension has been filed. If your return was flagged due to an error or omission you may have received recently a letter from the IRS.
For many, the sight of a letter from the IRS in the mail can be a nerve-wracking feeling. There are many reasons the IRS may need to contact you regarding your tax return and taking action on your part may be necessary.
Read the IRS letter as soon as possible
To understand what the IRS needs from you, you must read the IRS letter as soon as possible. Many IRS communications require a prompt response within a specified time frame. Once you have read your letter, you will have a better understanding of where you stand with the IRS. In some cases, it may just be an informational letter about the status of your return or a request to identify your identity.
However, if the language of the letter specifies that your return has been selected for a further examination this indicates you are under IRS audit and must respond as soon as possible. IRS audits can occur for any number of reasons, but some situations are more likely to trigger an audit.
Common IRS audit triggers can include:
- Computation errors
- Omissions of income
- High ratio of deductions
- Excess business-related losses
- Foreign bank account
- Upper-income brackets
Formulate an informed and targeted response
Taxes are complex and dealing with the IRS can be a stressful experience, but it is necessary to respond promptly to all requests. Review your financial records, tax return, and the specific information requested in the letter from the IRS. When it comes to the IRS timeliness and accuracy are critical. You must respond to any requests for information on your tax return carefully and only provide the specific information requested. Keep in mind that any communication whether by telephone, mail, or email; as well as all information provided to the IRS by you can lead to further investigation into your tax situation. If you are unsure about the process or how to proceed take the time to research all the options available to you before you submit an official response.