Top 10 Tips to Know if You Get a Letter from the IRS

The IRS mails millions of notices and letters to taxpayers each year. There are a variety of reasons why we might send you a notice. Here are the top 10 tips to know in case you get one.

1.   Don’t panic. You often can take care of a notice simply by responding to it.

2.   An IRS notice typically will be about your federal tax return or tax account. It will be about a specific issue, such as changes to your account. It may ask you for more information. It could also explain that you owe tax and that you need to pay the amount that is due.

3.   Each notice has specific instructions, so read it carefully. It will tell you what you need to do.

4.   You may get a notice that states the IRS has made a change or correction to your tax return. If you do, review the information and compare it with your original return.

5.   If you agree with the notice, you usually don’t need to reply unless it gives you other instructions or you need to make a payment.

6.   If you do not agree with the notice, it’s important for you to respond. You should write a letter to explain why you disagree. Include any information and documents you want the IRS to consider. Mail your reply with the bottom tear-off portion of the notice. Send it to the address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.

7.   You won’t need to call the IRS or visit an IRS office for most notices. If you do have questions, call the phone number in the upper right-hand corner of the notice. Have a copy of your tax return and the notice with you when you call. This will help the IRS answer your questions.

8.   Always keep copies of any notices you receive with your other tax records.

9.   Be alert for tax scams. The IRS sends letters and notices by mail. The IRS does not contact people by email or social media to ask for personal or financial information.

10.   For more on this topic visit IRS.gov. Click on the link ‘Responding to a Notice’ at the bottom left of the home page. Also, see Publication 594, The IRS Collection Process. You can get it on IRS.gov/forms at any time.

Facts and What You Need to Know About Obamacare (Health Care Law and Taxes)

Health Care Law and Taxes – More Time to File

Most taxpayers will simply check a box on their return to indicate that everyone listed on the front of the return has qualifying health care coverage for the entire year and may not need more time to file.

However, people who haven’t finished filling out their return can get an automatic six-month extension. The fastest and easiest way to get the extra time is through theFree File link on IRS.gov. In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an automatic tax-filing extension onForm 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.

If you received your coverage through a Marketplace, you may have received an incorrect Form 1095-A, Health Insurance Marketplace Statement, or your form may have been delayed. If you have not yet filed your income tax return, you should file by April 15 using either the Form 1095-A that you have received or the corrected form, if available. Alternatively, you may file for an extension of time to file by April 15 using Form 4868. For more information including information about what to do if you already filed your tax return, see our Incorrect Forms 1095-A and the Premium Tax Credit questions and answers.

An extension to file will give you until Oct. 15 to file your taxes. It does not give you more time to pay your taxes. You still must estimate and pay what you owe by April 15 to avoid a late filing penalty. You will be charged interest on any tax that you do not pay on time. You may also owe a penalty if you pay your tax late. In light of some tax filers not receiving their correct Forms 1095-A, in time, the Treasury Department and IRS released guidance providing penalty relief for individuals who are unable to file an accurate return by April 15. Generally, in order to qualify for this relief, taxpayers must file either Form 1040 series or Form 4868 by April 15. A return must be filed by Oct. 15. More specifics on the relief is included in Notice 2015-30, Penalty Relief Related To Incorrect Or Delayed Forms 1095-A.

For more information about the Affordable Care Act, visit IRS.gov/aca.

If you need help with any tax issue please contact me at either nick@patriotresolution.com or nick@irstaxhelp.tax

What to do when faced with IRS Late Filing and Late Paying Penalties

Nicholas Hartney will tell you how to resolve your IRS penalties

Frustrated with IRS Penalties? Don’t worry there is relief!

What to Know about Late Filing and Late Paying Penalties

April 15 was the tax day deadline for most people. If you are due a refund there is no penalty if you file a late tax return. But if you owe tax, and you failed to file and pay on time, you will usually owe interest and penalties on the tax you pay late. You should file your tax return and pay the tax as soon as possible to stop them. Here are eight facts that you should know about these penalties.

1.   Two penalties may apply. If you file your federal tax return late and owe tax with the return, two penalties may apply. The first is a failure-to-file penalty for late filing. The second is a failure-to-pay penalty for paying late.

2.   Penalty for late filing. The failure-to-file penalty is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. It will not exceed 25 percent of your unpaid taxes.

3.   Minimum late filing penalty. If you file your return more than 60 days after the due date or extended due date, the minimum penalty for late filing is the smaller of $135 or 100 percent of the unpaid tax.

4.   Penalty for late payment. The failure-to-pay penalty is generally 0.5 percent per month of your unpaid taxes. It applies for each month or part of a month your taxes remain unpaid and starts accruing the day after taxes are due. It can build up to as much as 25 percent of your unpaid taxes.

5.   Combined penalty per month. If the failure-to-file penalty and the failure-to-pay penalty both apply in any month, the maximum amount charged for those two penalties that month is 5 percent.

6.   File even if you can’t pay. In most cases, the failure-to-file penalty is 10 times more than the failure-to-pay penalty. So if you can’t pay in full, you should file your tax return and pay as much as you can. Use IRS Direct Pay to pay your tax directly from your checking or savings account. You should try other options to pay, such as getting a loan or paying by debit or credit card. The IRS will work with you to help you resolve your tax debt. Most people can set up an installment agreement with the IRS using the Online Payment Agreement tool on IRS.gov.

7.   Late payment penalty may not apply. If you requested an extension of time to file your income tax return by the tax due date and paid at least 90 percent of the taxes you owe, you may not face a failure-to-pay penalty. However, you must pay the remaining balance by the extended due date. You will owe interest on any taxes you pay after the April 15 due date.

8.   No penalty if reasonable cause. You will not have to pay a failure-to-file or failure-to-pay penalty if you can show reasonable cause for not filing or paying on time. There is also penalty relief available for repayment of excess advance payments of the premium tax credit for 2014.

Need some help with a penalty abatement or an Offer in Compromise? Check out my other sites by clicking the following links or contact me at nick@patriotresolution.com or nick@irstaxhelp.tax with any questions you may have. I look forward to hearing from you!

IRS Abatement of Penalty Request

Offer in Compromise