One ordinary day, a taxpayer called us because IRS sent them a notice with a balance of almost $3,500. The taxpayer said that he was quite sure that he included all tax forms and reported all income.
In our experience, the best source to consult whether all income have been accounted for is to download the Wage & Income transcript from the IRS. Or, in this case, the IRS beat them to the punch and issued a CP2000 letter. Nothing to stress about, though! The letter is like a friendly heads-up, pointing out a little slip-up where $28,000 of income from a 1099-NEC didn’t make it into the initial tax return. Happens to the best of us, right? The IRS is just giving a nudge to make sure everything gets squared away properly. Just a little reminder to keep things smooth and straightforward! 🌟✉️
So here went our conversation with the confused taxpayer:
Hey, do you remember receiving this extra bit of income? Oh, yeah, I thought I’ve reported it. My bad.
No biggies at all. Seriously, it happens more often than we think. It’s actually very common for taxpayers to forgot to include some tax forms. Totally normal. That’s why we’re here – to lend a hand and sort out these tax hiccups.
So let’s see… Is this income from a self-employment business? A side hustle? Yes, I have a little side gig that I just recently kicked off.
Awesome! How about we find some expenses to balance out this business income? Sound good? For sure. I have a home office, and some mileage, to start.
Lucky for us, this taxpayer is practically a pro at keeping track of their business miles and expenses. Made our job a breeze!
It took us almost a year, but we worked our magic and slashed that initial $3,500 balance down to under $500. Huge win, right? The taxpayer was over the moon, and we even got some promises about a super-organized folder for all future paperwork and some serious receipt scanning action.
The above letter was almost like a love letter. Well, almost!