IRS is ramping up and tax letters are going out en masse now.

IRS tax letter info. Pub 5181

IRS tax letters are being sent now, probably by the tens of thousands daily. There are huge backlogs since the IRS was mostly closed for months. I work at H&R Block and we are seeing many of them now.

First off, don’t panic. Read the tax letter carefully. It might say they need more information. If so, send it to them. If you owe money there is generally a process by which you can appeal it. I suggest making an appoinment at H&R Block with an Enrolled Agent. They are authorized by the IRS to represent taxpayers before the IRS. Do not try to do this on your own unless you really know what you are doing. The initial consultation with an EA at Block is free. There may be fees depending on what happens next.

If you agree you owe the money, you can pay online at irs.gov. You can pay the entire amount at once or set up a payment plan. It can be up to seven years and the interest is reasonable. If the amount owed is less than $10,000 the payment plan is almost always accepted online.

Pub 5181

This publication explains in detail what tax letters are about and what to do if you get one.

Form 8962

Some IRS tax letters now are for Form 8962 and are related to healthcare insurance. They want to reconcile what the return said about healthcare insurance costs and subsidies vs. what they know. This is not always bad for the taxpayer. I just filed a Form 8692 for a client and he’s getting $600 more back! It’s costs $35 to file the form and we need your 2019 tax return, and whatever healthcare forms you got, either 1095-A, 1095-B, or 1095-C.

Unemployment benefits are taxable

FYI: To avoid nasty surprises at tax time, download Form W4-V from IRS, say you want taxes taken out of unemployment check before you get the money, then send it to the applicable agency. Otherwise, put money aside for taxes.

Payroll tax deferment

Trump’s payroll tax deferment of 6.2% for 4 months is due when you pay taxes in 2021. Might want to stash money aside for this too