IRS notifications coming soon, but don't panic

For the latecomers who waited until the April 15 deadline to file their federal tax returns, the next few weeks could be interesting.

While the Internal Revenue Service sends letters to taxpayers year-round seeking more information on the tax returns they filed for the previous year, there's an uptick in IRS letters in June and July to people who waited until April 15 to file, said Brittney Saks, a partner in PricewaterhouseCoopers' Private Company Services, or PCS.

Taxes in the News

    Gov. Arnold Schwarzengger tells reporters that he and lawmakers will try to quickly solve the state's $21.3 billion budget deficit without taxes, gimmicks or much borrowing, after appearing at a prayer breakfast in Sacramento, Calif., Thursday, May 21, 2009. (AP Photo/Rich Pedroncelli)

    AP

    Gov. Arnold Schwarzengger tells reporters that he and lawmakers will try to quickly solve the state's $21.3 billion deficit without taxes, gimmicks or much borrowing,after appearing at a prayer breakfast, in Sacramento, Calif., Thursday, May 21, 2009. (AP Photo/Rich Pedroncelli)

    AP

    SAN RAFAEL, CA - MAY 20: Six packs of beer are displayed on a shelf at liquor store May 20, 2009 in San Rafael, California. Federal lawmakers are considering an increase on tax paid for beer, wine, liquor and sugary sodas to help fund health insurance for an estimated 50 million uninsured Americans. Under the proposal, taxes on beer would be increased by 48 cents a six-pack. (Photo by Justin Sullivan/Getty Images)

    Getty Images

    SAN RAFAEL, CA - MAY 20: Six and twelve packs of beer are displayed on a shelf at liquor store May 20, 2009 in San Rafael, California. Federal lawmakers are considering an increase on tax paid for beer, wine, liquor and sugary sodas to help fund health insurance for an estimated 50 million uninsured Americans. Under the proposal, taxes on beer would be increased by 48 cents a six-pack. (Photo by Justin Sullivan/Getty Images)

    Getty Images

    SAN FRANCISCO - MAY 20: Six packs and single bottles of beer are displayed on a shelf at the City Beer Store May 20, 2009 in San Francisco, California. Federal lawmakers are considering an increase on tax paid for beer, wine, liquor and sugary sodas to help fund health insurance for an estimated 50 million uninsured Americans. Under the proposal, taxes on beer would be increased by 48 cents a six-pack. (Photo by Justin Sullivan/Getty Images)

    Getty Images

    SAN FRANCISCO - MAY 20: A customer shops for beer at the City Beer Store May 20, 2009 in San Francisco, California. Federal lawmakers are considering an increase on tax paid for beer, wine, liquor and sugary sodas to help fund health insurance for an estimated 50 million uninsured Americans. Under the proposal, taxes on beer would be increased by 48 cents a six-pack. (Photo by Justin Sullivan/Getty Images)

    Getty Images

    SAN FRANCISCO - MAY 20: Six packs and single bottles of beer are displayed on a shelf at the City Beer Store May 20, 2009 in San Francisco, California. Federal lawmakers are considering an increase on tax paid for beer, wine, liquor and sugary sodas to help fund health insurance for an estimated 50 million uninsured Americans. Under the proposal, taxes on beer would be increased by 48 cents a six-pack. (Photo by Justin Sullivan/Getty Images)

    Getty Images

    SAN FRANCISCO - MAY 20: Six packs and single bottles of beer are displayed on a shelf at the City Beer Store May 20, 2009 in San Francisco, California. Federal lawmakers are considering an increase on tax paid for beer, wine, liquor and sugary sodas to help fund health insurance for an estimated 50 million uninsured Americans. Under the proposal, taxes on beer would be increased by 48 cents a six-pack. (Photo by Justin Sullivan/Getty Images)

    Getty Images

    SAN FRANCISCO - MAY 19: Cigarette butts are seen in the cracks of the sidewalk May 19, 2009 in San Francisco, California. San Francisco mayor Gavin Newsom is proposing a 33 cent tax on cigarettes purchased in San Francisco to offset the more than $44 million a year that the city spends on cleaning up discarded cigarette butts. (Photo by Justin Sullivan/Getty Images)

    Getty Images

    SAN FRANCISCO - MAY 19: A smoker takes a puff off of a cigarette as he smokes in a park May 19, 2009 in San Francisco, California. San Francisco mayor Gavin Newsom is proposing a 33 cent tax on cigarettes purchased in San Francisco to offset the more than $44 million a year that the city spends on cleaning up discarded cigarette butts. (Photo by Justin Sullivan/Getty Images)

    Getty Images

Between April 15 and June and July is how long it takes the IRS' computers to go over those late returns and send out any inquiries to taxpayers. Going to the mailbox this summer could become an adventure for some.

"I think people just get nervous when they see the IRS letterhead," Saks said in a telephone interview from her Chicago office.Because the tax returns are first processed by computers for inconsistencies, the form letters usually ask for information that can be easily resolved, such as a matching issue with a Social Security number or no signature on the return.

"The first thing is, don't panic," Saks said.

"I think the important thing is, don't ignore it," she said. "Don't throw it in the garbage, because you'll just get more."

PCS deals mostly with private businesses and their wealthy owners, so while it's doubtful you'll use its services, Saks' advice holds weight for anyone getting a letter from the IRS. If you filed the return yourself, call the IRS for help, and if you hired an accountant, ask them for assistance, Saks suggested.

If you get a letter and a refund or stimulus check at the same time, cash the check if the amount matches your records of how much refund you expected from the government, she said. But don't cash it if it's too high, because the IRS will eventually catch its error and charge interest if the check is cashed.

"Whenever you get a refund check, before you cash it, you want to make sure that the amount matches your return," Saks said.

If the refund check is for less than you expected, then you should also be getting an IRS letter explaining the change. If you agree, do nothing more than cash the check. If you disagree, you can still cash the check, but you'll have to submit documentation of why you disagree with the smaller number.

Top Five Ways to Avoid a Tax Audit

If the IRS does decide to audit you, there is little you may do to stop it. You may, however, reduce the odds that you will be singled out for that extra attention in the first place.

Read More

Brought to you by TurboTax.com

What Filing Status Deducts the Most Taxes?

Your filing status can make a big difference in how much income tax you pay. If you make $40,000 a year, for instance, the amount of tax you will pay depends on which filing status you qualify for. The difference in tax rates are significant and can mean the difference between paying up to 15 percent or 25 percent. Your decision to file single, jointly or as head of household will also affect the size of your standard deduction.

Read More

Brought to you by TurboTax.com

Are College Entrance Exams Tax Deductible?

The fees for taking SAT, ACT and other college entrance exams are not tax-deductible, but the federal government does allow a number of educational deductions and tax credits. Find out more about these educational deductions and credits and how they can benefit you.

Read More

Brought to you by TurboTax.com
Read Full Story