Every year the IRS mails millions of letters to taxpayers for many reasons. Here are some tips and suggestions for taxpayers who receive one:
- Don’t ignore it. Most IRS letters and notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes specific instructions on what to do.
- Don’t panic. The IRS and its authorized private collection agencies do send letters by mail. Most of the time all the taxpayer needs to do is read the letter carefully and take the appropriate action.
- Do take timely action. A notice may reference changes to a taxpayer’s account, taxes owed, a payment request or a specific issue on a tax return. Taking action timely could minimize additional interest and penalty charges.
- Do review the information. If a letter is about a changed or corrected tax return, the taxpayer should review the information and compare it with the original return. If the taxpayer agrees, they should make notes about the corrections on their personal copy of the tax return, and keep it for their records.
- Don’t reply unless instructed to do so. There is usually no need for a taxpayer to reply to a notice unless specifically instructed to do so. On the other hand, taxpayers who owe should reply with a payment. IRS.gov has information about payment options.
- Do respond to a disputed notice. If a taxpayer does not agree with the IRS, they should mail a letter explaining why they dispute the notice. They should mail it to the address on the contact stub at the bottom of the notice. The taxpayer should include information and documents for the IRS to review when considering the dispute. The taxpayer should allow at least 30 days for the IRS to respond.
- Do remember that there is usually no need to call the IRS. If a taxpayer must contact the IRS by phone, they should use the number in the upper right-hand corner of the notice. The taxpayer should have a copy of the tax return and letter when calling.
- Do avoid scams. The IRS will never initiate contact using social media or text message. The first contact from the IRS usually comes in the mail. Taxpayers who are unsure if they owe money to the IRS can view their tax account information on IRS.gov.
If you made or received a payment during the calendar year as a small business or self-employed (individual), you are most likely required to file an information return to the IRS.
Made a Payment
If, as part of your trade or business, you made any of the following types of payments, use the link to be directed to information on filing the appropriate information return.
- Payments, in the course of your trade or business: (1099-MISC) (Note: It is important that you place the payment in the proper box on the form. Refer to the instructions for more information.)
- Services performed by independent contractors or others (not employees of your business) (Box 7)
- Prizes and awards and certain other payments (see Instructions for Form 1099-MISC, Box 3. Other Income, for more information)
- Rent (Box 1)
- Royalties (Box 2)
- Backup withholding or federal income tax withheld (Box 4)
- Crewmembers of your fishing boat (Box 5)
- To physicians, physicians’ corporation or other supplier of health and medical services
- For a purchase of fish from anyone engaged in the trade or business of catching fish (Box 7)
- Substitute dividends or tax exempt interest payments and you are a broker (Box 8)
- Crop insurance proceeds (Box 10)
- Gross proceeds of $600 or more paid to an attorney (generally, Box 7, but see instructions as Box 14 may apply)
- Interest on a business debt to someone (excluding interest on an obligation issued by an individual) (1099-INT)
- Dividends or other distributions to a company shareholder (1099-DIV)
- Distribution from a retirement or profit plan or from an IRA or insurance contract (1099-R)
- Payments to merchants or other entities in settlement of reportable payment transactions, that is, any payment card or third party network transaction (1099-K)
Received a Payment and Other Reporting Situations
If, as part of your trade or business, you received any of the following types of payments, use the link to be directed to information on filing the appropriate information return.
- Payment of mortgage interest (including points) or reimbursements of overpaid interest from individuals (1098)
- Sale or exchange of real estate (1099-S)
- You are a broker and you sold a covered security belonging to your customer (1099-B)
- You are an issuer of a security taking a specified corporate action that affects the cost basis of the securities held by others (Form 8937)
- You released someone from paying a debt secured by property or someone abandoned property that was subject to the debt (1099-A) or otherwise forgave their debt to you (1099-C)
- You made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment (1099-MISC)
Not Required to File Information Returns
- You are not engaged in a trade or business.
- You are engaged in a trade or business and
- the payment was made to another business that is incorporated, or
- the sum of all payments made to the person or unincorporated business is less than $600 in one tax year (unless the recipient is an attorney or law form, see specific instructions for 1099-MISC for further details).
All information comes from : https://www.irs.gov/businesses/small-businesses-self-employed/am-i-required-to-file-a-form-1099-or-other-information-return
As the taxpayer claiming a child (or children), you need to provide documentation that the child/children actually live with you. Below is a list of documents that may be used to support that claim:
- School records or statement showing the child’s (your) address
- Landlord or property management statement
- Health care provider statement
- Medical records
- Child care provider records
- Placement agency statement
- Social service records or statement
- Place of worship statement
- Indian tribal official statement
- Employer statement
Be sure to include at least one of these things with the documentation you provide to your tax preparer to do your tax return if your income is low enough that you expect to qualify for the EIC.
If you are claiming a disabled child, you will need to prove the disability by providing at least one of the following:
- Doctor statement
- Other health care provider statement
- Social services agency or program statement
Lastly, if a Schedule C for a self-employed business is filed as part of the tax return, the tax preparer must document the existence of the business and document what records were used to determine the business income and expenses claimed for the business. These records to submit to your preparer include the following:
- Business license
- 1099-MISC forms
- Records of gross receipts
- Income summary
- Expense summary
- Bank statements
These are permanent documentation requirements for 2013 tax returns and beyond for anyone claiming the federal Earned Income Credit.