IRS Notices and Tax Resolution

  • What is an IRS notice?

    The IRS sends notices for many different reasons, including requesting information, correcting a return, proposing additional tax, or notifying taxpayers of a balance due. Receiving a notice does not automatically mean you did anything wrong.

    What should you do?

    • Read the notice carefully.

    • Confirm the tax year involved.

    • Pay attention to responses deadlines.

    • Compare the notice with your tax return and records.

    • Do not ignore IRS correspondence, even if you believe it is incorrect.

  • What is an IRS Online Account?

    An IRS Online Account allows taxpayers to securely access important information about their federal tax account directly from the IRS.

    What can you access?

    Through an IRS Online Account, you may be able to:

    • View your account balance.

    • Review payment history.

    • Access certain IRS notices.

    • View payment plan information.

    • Retrieve tax transcripts.

    • View estimated tax payments and other account activity.

    What are tax transcripts?

    Tax transcripts are official IRS records that summarize information reported on your tax account. Depending on the type of transcript, they may include information from filed tax returns, IRS account activity, wage and income reporting, and payment history.

    Why are transcripts important?

    Tax transcripts often provide valuable information when reviewing IRS notices, preparing prior-year returns, or understanding the status of a tax matter.They can also help verify information reported to the IRS by employers, financial institutions, and other third parties.

  • What is an IRS payment plan?

    An IRS payment plan allows eligible taxpayers to pay certain federal tax balances over time instead of making one full payment. Different payment options may be available depending on the amount owed and the taxpayer’s financial circumstances.

    What should you know?

    • Filing all required tax returns is an important step before requesting a payment plan.

    • Interest and applicable penalties may continue to accrue until the balance is paid in full.

    • Different payment plan options exist, and eligibility depends on your individual circumstances.

    • Missing payments or failing to remain compliant with future tax obligations may affect your payment agreement.

  • What is Penalty Relief?

    The IRS may reduce or remove certain penalties when taxpayers qualify under specific provisions of the tax law. Whether penalty relief is available depends on the type of penalty and the taxpayer’s individual circumstances.

    What should you know?

    • Penalty relief is not automatic.

    • Some taxpayers may qualify for relief based on their compliance history or other qualifying circumstances.

    • Supporting documentation may be needed depending on the reason relief is requested.

    • Interest on unpaid tax may continue to accrue even if a penalty is reduced or removed.

  • What are your taxpayer rights?

    The IRS recognizes ten fundamental rights that apply to every taxpayer. These rights are collectively known as the Taxpayer Bill of Rights and are intended to ensure taxpayers are treated fairly throughout the administration of tax laws.

    What should you know?

    • You have the right to be informed and understand what the IRS is requesting.

    • You have the right to professional and courteous treatment.

    • You have the right to retain representation when communicating with the IRS.

    • You have the right to privacy and confidentiality as provided by law.

Tax Resources for Immigrants and International Families

  • What is an ITIN?

    An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service (IRS). It is intended for individuals who have a federal tax filing or reporting requirement but are not eligible to obtain a Social Security number.

    What should you know?

    • An ITIN is used for federal tax purposes only.

    • It does not provide authorization to work in the United States.

    • It does not change an individual’s immigration status.

    • Certain ITINs may require renewal before they can be used on a tax return.

  • What is the difference?

    A Social Security number (SSN) and an Individual Taxpayer Identification number (ITIN) are both taxpayer identification numbers, but they are issued for different purposes and under different eligibility requirements.

    What should you know?

    • An SSN is issued by the Social Security Administration.

    • An ITIN is issued by the IRS.

    • Both may be used for federal tax purposes when appropriate.

    • Eligibility for an SSN or ITIN depends on each individual’s circumstances.

  • Can I still file a tax return?

    In some situations, individuals who are not eligible for a Social Security number may still have a federal tax filing requirement. An ITIN may allow eligible taxpayers to satisfy certain federal tax filing obligations.

    What should you know?

    • Filing obligations depend on your individual tax situation.

    • Some taxpayers may qualify to apply for an ITIN.

    • Filing requirements vary depending on income, residency, and other factors.

  • What is Tax Identity Theft?

    Tax identity theft occurs when someone uses another person’s Social Security number or ITIN to file a fraudulent tax return or obtain an improper tax benefit.

    What should you know?

    • Protect your SSN or ITIN and avoid sharing it unnecessarily.

    • Review IRS correspondence carefully.

    • Create an IRS Online Account to monitor your tax account.

    • Consider an Identity Protection PIN (IP PIN) if appropriate.

  • Can I still file my tax return if English is not my first language?

    Yes. Many taxpayers successfully meet their federal tax filing obligations even if English is not their primary language. The most important step is making sure you understand the information being reported and the documents you are signing before your return is filed.

    What should you know?

    • You should understand the information reported on your tax return before signing it.

    • Keep copies of your tax returns and supporting documents for your records.

    • Ask questions if you do not understand tax forms, notices, or other correspondence.

    • Never sign a tax return that you have not reviewed or do not understand.

U.S. Taxpayers Living Abroad

  • Do I still have to file a U.S. tax return?

    U.S. citizens and certain resident taxpayers living abroad may still have federal tax filing obligations, even if they earn income in another country. Filing requirements depend on your individual circumstances, including your income, filing status, and applicable tax rules.

    What should you know?

    • Living outside the United States does not automatically eliminate U.S. tax filing requirements.

    • Filing deadlines and extensions may differ for taxpayers living abroad.

    • Certain provisions may help reduce double taxation for qualifying taxpayers.

    • Living abroad does not automatically exempt you from U.S. tax reporting requirements.

  • What are these provisions?

    The Foreign Earned Income Exclusion and Foreign Tax Credit are separate provisions that may help qualifying taxpayers reduce the effect of double taxation on foreign income.

    What should you know?

    • The Foreign Earned Income Exclusion may allow qualifying taxpayers to exclude a limited amount of foreign earned income from U.S. taxable income.

    • The Foreign Tax Credit may provide a credit for certain qualifying income taxes paid or accrued to a foreign country.

    • You cannot claim a Foreign Tax Credit for foreign taxes attributable to income excluded under the Foreign Earned Income Exclusion.

    • A taxpayer may still be able to claim the Foreign Tax Credit for other qualifying foreign-source income or income exceeding the amount excluded.

    • The most beneficial approach depends on the taxpayer’s income, foreign tax paid, eligibility, and long-term circumstances.

  • What is FBAR reporting?

    Some U.S. taxpayers with foreign financial accounts may be required to report those accounts separately from their federal income tax return.

    What should you know?

    • FBAR reporting is separate from your federal income tax return.

    • Reporting requirements depend on the value of your foreign financial accounts.

    • Foreign accounts may require reporting even if no tax is owed.

    • Different reporting rules may apply depending on your circumstances.

  • What if I haven’t filed?

    Some taxpayers living abroad discover they have not filed one or more required U.S. tax returns or other required tax reports. Every situation is different, and the appropriate approach depends on the specific facts and circumstances of each taxpayer.

    What should you know?

    • Ignoring missing tax returns or reporting requirements may limit your available options.

    • Filing requirements vary depending on your income, residency, foreign financial accounts, and other factors.

    • Some taxpayers may have additional international reporting requirements beyond filing a federal income tax return.

    • Bringing your tax filings current often depends on your filing history and individual circumstances.

  • Does working remotely from another country affect my U.S. taxes?

    It may. U.S. citizens and certain resident taxpayers who work remotely while living abroad may still have U.S. tax filing and reporting obligations. Tax responsibilities depend on many factors, including where you live, the type of work you perform, and how your income is earned.

    What should you know?

    • Working outside the United States does not automatically eliminate your U.S. tax filing obligations.

    • Your residency, employment status, and source of income may affect your tax reporting requirements.

    • Some taxpayers may qualify for international tax provisions to help reduce double taxation.

    • Working remotely from another country may create additional U.S. tax considerations.

Small Business Tax Resources

  • What are estimated tax payments?

    Estimated tax payments are periodic payments made throughout the year to cover federal income tax and, when applicable, self-employment tax. They help taxpayers pay taxes as income is earned rather than waiting until a return is filed.

    What should you know?

    • Some business owners may need to make estimated tax payments throughout the year.

    • The amount due depends on your income, deductions, credits, and withholding.

    • Waiting until tax season may result in penalties or a larger balance due.

    • Estimated tax requirements vary depending on your individual circumstances.

  • What is an S Corporation election?

    An S corporation election is a federal tax election that allows certain eligible business entities to be taxed under Subchapter S of the Internal Revenue Code. It does not create a new business entity under state law.

    What should you know?

    • An S Corporation election changes how a business is taxed, not how it is formed.

    • Not every business benefits from electing S Corporation status.

    • An S Corporation election also creates additional tax and payroll responsibilities.

    • Eligibility requirements and filing deadlines apply.

  • What is the difference?

    A calendar year runs from January 1 through December 31. A fiscal year is a 12-month accounting period that ends on a month other than December.

    What should you know?

    • Most businesses use a calendar year.

    • Some businesses may qualify to use a fiscal year.

    • Choosing an accounting year affects tax filing deadlines and financial reporting.

    • A business cannot always choose any accounting year it prefers.

  • What is a partnership?

    A partnership is a business owned by two or more people. Although partnerships generally do not pay federal income tax, they are required to file an annual information return.

    What should you know?

    • Partnerships generally file Form 1065.

    • Each partner usually receives a Schedule K-1 reporting their share of income, deductions, and other tax items.

    • Partners generally report information from the Schedule K-1 on their individual tax returns.

    • A partnership return is separate from each partner’s individual return.

  • What is a Schedule K-1?

    A Schedule K-1 reports a partner’s, shareholder’s, beneficiary’s, or certain other recipients’ share of income, deductions, credits, and other tax items from another entity.

    What should you know?

    • Receiving a Schedule K-1 does not necessarily mean you received cash.

    • The information reported on a K-1 is generally needed to prepare your individual tax return.

    • Different types of K-1s exist depending on the entity issuing the form.

    • Do not file your individual return until you have received all required Schedule K-1s.

  • Why is recordkeeping important?

    Accurate records help business owners prepare tax returns, support deductions, monitor financial performance, and respond to IRS inquiries when necessary.

    What should you know?

    • Maintain complete records of income and business expenses.

    • Keep business and personal finances separate whenever possible.

    • Retain supporting documentation for deductions and credits.

    • Good records make tax preparation and tax planning much easier.

  • Does every business file a separate tax return?

    Not necessarily. Whether a business files a separate federal tax return depends on its legal structure and tax classification.

    What should you know?

    • Sole proprietorships generally report business income on the owner’s individual tax return.

    • Partnerships, S Corporations, and C Corporations file separate business tax returns.

    • Single-member LLCs may have different filing requirements depending on their tax classification.

    • The legal structure of a business does not always determine how it is taxed.

Retirement Income

  • Is retirement income taxable?

    Some retirement income may be taxable, while other types may receive different tax treatment. Whether retirement income is taxable depends on the source of the income and your individual tax situation.

    What should you know?

    • Different retirement accounts follow different tax rules.

    • Some retirement income may be fully taxable, partially taxable, or tax-free.

    • The type of retirement account often determines how distributions are taxed.

    • Your overall income may affect your tax liability.

  • What is a Form 1099-R?

    Form 1099-R reports distributions from retirement plans, pensions, annuities, IRAs, insurance contracts, and certain other retirement-related accounts.

    What should you know?

    • A Form 1099-R does not automatically mean the entire distribution is taxable.

    • Distribution codes provide information about the type of distribution reported.

    • Keep your Form 1099-R with your tax records.

    • Additional information may be needed when preparing your return.

  • Are Social Security benefits taxable?

    Some taxpayers pay federal income tax on a portion of their Social Security benefits, while others do not. Taxability depends primarily on your combined income and filing status.

    What should you know?

    • Receiving Social Security benefits does not automatically create a tax liability.

    • Other income may affect how much of your benefits are taxable.

    • Whether Social Security is taxable depends on your individual circumstances.

    • State taxation of Social Security varies.

  • What is a Required Minimum Distribution?

    A Required Minimum Distribution (RMD) is the minimum amount certain taxpayers must withdraw annually from specific retirement accounts after reaching the applicable age under federal law.

    What should you know?

    • RMD rules do not apply to every retirement account.

    • Required beginning dates depend on current tax law and your circumstances.

    • Failing to take a required distribution may result in penalties.

    • Distribution requirements may differ for inherited retirement accounts.

Investment Income

Estates, Trusts, and Beneficiaries

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