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By proadAccountId-379994 25 Aug, 2016

We’re way into August and okay just when you think you're done with taxes, you get a notice!

Well if this has happened to you, just know that you're not the first and you won't be the last. My best way to describe tax notices is the IRS asking questions about something you’ve said, or maybe forgotten to say. (Yes, they are actually listening).


First thing you want to do is make sure it to your notice. This may seem a bit obvious, but in this age of paper mail being delivered to wrong addresses you'd be surprised. Notice the tax year that will tell you what year they're questioning. That helps you focus your energy on gathering the right folder to find any discrepancies. Unfortunately, it can take a few years for IRS to catch up with you with questions that you may have to provide documentation for, so be sure and keep your records at least 3 years, if not a few more just to be safe.


After you've done the preliminaries now it's time to get into the meat of the notice, starting with the first section, which is pretty much a summary, that includes any actual tax owed, any payments toward that tax, next interest and penalties, if any, the total amount due and when it is due.
If it’s the first notice, there’s a good chance that IRS is just “proposing” additional tax. If so, it will will actually say that and the amount due in bold letters, and then include the summary tax, interest, new amount and due date.


Next section actually appears before they’ve provided the details. It’s still helpful to know this though in case you’re tempted to put the notice down and forget about it

There's typically a phone number to call, which will usually get your call answered more quickly. Always have your notice available because they will ask you this information to provide answers.

You may also see what to do if you agree with the change, what to do if you disagree with the change, and then what IRS will do if they don't hear from you. Scary language indeed!


We’re finally getting to why you got the notice in the first place. If it’s the first notice and you’re receiving it because of IRS records differing what you provided on your return, the notice will detail
  • What your return said
  • What was sent to IRS
  • The difference, which is pure math. And more importantly how the differences affected not just your total income, but the new (proposed) tax on that income.

If you’re one of the lucky ones, yours will actually show the refund if the error was in your favor.  Honestly, in years of doing taxes, I can’t think of even one notice I've seen like that.

So here some common reasons why you may get a notice from IRS

  • Mismatched or missing income. Forms were sent to IRS but not included on your return. Income was reported but in in the wrong place of the return or didn’t match in type of income. Normally this happens because you forgot about a form, or it didn’t reach you in the mail. The most common form types are W-2, 1099, retirement, interest or dividend income. 

  • Education credit - you claimed it, but weren’t entitled to it (this is a big one)

  • Earned Income Credit / Child Tax Credit - you claimed it, but weren't actually eligible to claim it, or claimed too much based on the IRS changes.

  • Healthcare Marketplace Credit - If you received any kind of premium reduction (tax credit), you have to provide a the reconciliation as part of your return, and if you reported it, IRS changes could have changed the results.

  • Student loan interest - maybe you claimed too much, based on your income (or your new income after IRS modified it)

  • Additional Medicare Tax (for high income earners). You didn't pay enough or after IRS changes, now owe it. 

Unfortunately I can't list all of the possible reasons you're getting a notice here, but you can find the full IRS article here: https://www.irs.gov/individuals/understanding-your-irs-notice-or-letter


Make the call, send the return, sign the notice, etc.  Whatever the instructions are, make sure you follow them, or at least call IRS so they can note your account and give further action or additional time. Take written notes of when you called.  who you spoke with and their identifying number and keep with the notice.  

If you don't take action, the issue will just get worse.

Be sure and connect with me on Social media, so you’ll hear about the FREE webinars I’ll be hosting on this and other small business tax matters.

Make it a great day - ESPECIALLY for your money :)

By Mildred Dillon 19 Aug, 2016

Our entire lives revolve around credit and keeping the credit score high enough so that we can buy things such as houses, cars, insurance, cell phones, and rent cars and places to live. Even utilities can use credit reports to determine the interest rate you’ll pay and in some cases whether you can even get the item you want.

If you have no credit, you will still get to buy these things, but it might cost you an added one or two percentage points in interest or require a larger down payment. Even with the inconvenience, though, you’re likely to experience many more benefits of living without credit than drawbacks.

So can you really live without credit?  

Whether you're forced to do it because you're not getting approved or the thought just crossed your mind, here are some reasons to literally rejoice if you've been shut out of the system and unable to get all the credit you want:

* No One Can Tell You "No" – When you apply for credit they can say no for many reasons, some that make sense and some that don’t. When you use your own money you say "yes" to yourself with a feeling of freedom rather than defeat.

* You’ll Spend Less – The truth is, people tend to spend more money when it’s on credit than if they know they’re spending cash. When you spend cash, the money is harder to let go of because you know how hard you worked to get that money.

* You’ll Have Fewer Bills – If you don’t use credit you’ll have fewer bills to pay each month, which can lessen the stress in your life exponentially. Being able to live with less money each month is a very freeing experience.

* You Will Save More Money – When you have fewer bills you can save more money. You are the one who will earn interest instead of the bank. You can put the money away and then ultimately end up using less credit due to saving more money.

* You're Better Prepared for the Futur e – Not using credit will make you a lot better prepared for the future due to the savings you will stockpile. Plus, if you have fewer monthly bills, you can live off less if you should get laid off.

* It Unleashes More Creativity – When you have to think outside the box to live less expensively, you will become more creative in your everyday life.

* It Keeps Your Priorities Straight – When you don’t use credit you are able to realize what is important. Having more things isn’t as important as the health and security of your family.

* You’ll Avoid Interest Charges – credit balances create extra expense called "interest" and depending on your credit score, your interest rate can be really high: usually in the double digits if you have bad credit. Imagine if you could earn this much money in your savings instead of paying that much for your movie tickets that you charged on credit. (We'll discuss debt balances and interest in a future post).

So, I hope you see that not only can you live without credit, you can live better without credit. The credit industry doesn’t want you to know that you can live without credit. They want you to feel as if you have to use credit for everything or you won’t be able to buy a house or get a job. But, the truth is there are always ways around those issues. They might initially cost a few dollars more but the savings from not using credit more than makes up for it.

Make sure you check back  for our next post soon. I and my team will be talking about starting off on the right track building credit and avoiding the pitfalls of debt - and those interest charges!

If you'd like a free download I wrote on the subject, visit the FREE TIPS page.  See you soon!

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