Receiving a letter from the IRS can cause immediate anxiety, but most notices are straightforward and can be addressed without major concerns. Here's what to do.
First, don't ignore it. IRS notices have deadlines, and failing to respond can escalate the situation. Open the letter, read it carefully, and note any response dates.
Identify the type of notice. The IRS sends different types of correspondence — from simple balance due notices to requests for additional documentation. The notice number (usually in the upper right corner) tells you exactly what type it is.
Review the notice against your records. Many IRS notices result from discrepancies between what you reported and what was reported to the IRS by employers, banks, or other institutions. Compare the figures before responding.
If you agree with the notice, follow the instructions provided. This may mean making a payment, providing documentation, or simply acknowledging the correction.
If you disagree, prepare a clear, organized response with supporting documentation. Include a copy of the notice, your explanation, and any records that support your position.
Consider professional help. If the notice involves a significant amount, complex issues, or if you're unsure how to respond, consulting with a tax professional ensures your response is accurate and timely.
Keep copies of everything — the original notice, your response, any supporting documents, and proof of mailing. This documentation is important if follow-up is needed.