5 Steps To Avoiding IRS Notices

Getting a letter or notice from the IRS can be upsetting, confusing, and unnecessary. The IRS sends taxpayers notices to request payment for taxes, to notify them of a change to their account, or to request additional information. Attention to the following details will reduce the likelihood that you will become pen pals with the IRS.

 

1. Always address what a payment is for when submitting to the IRS. 

If your payment is not tagged correctly, the IRS may apply it in any manner they want. = All payments should include:

  • Your name
  • Your taxpayer identification number – SSN if  paying for individual
  • The type of tax you are paying
  • The period the tax payment is for

 

2. Make sure that the name and social security number on your tax return matches the Social Security Administration’s records.

If you change your surname, notify the Social Security Administration and request a new social security card.

 

3. Don’t claim a tax exemption for your any children unless you are allowed to do so.

Special rules apply to divorced parents. If both parents claim the child as a dependent, both returns will be subject to further IRS review.

 

4. Always respond quickly to any IRS notice, even if you think it is outdated or incorrect.

If the IRS doesn’t hear from you within the time specified on their notice, you may lose the right to protest any changes made to your return.

 

5. Send a change of address form (Form 8822) to the IRS when your address changes.

If you fail to provide the IRS with your current mailing address, you may not receive a refund check or a notice if there are problems or adjustments to your return. And even if the IRS can’t find you, penalties and interest will continue to accumulate on any tax due.

 

For assistance with any tax concern you have, give us a call.

It’s Not Too Late To Create A Nest Egg

Many Southern California’s find it difficult to create a nest egg due to the high cost of living. The recent economy has also played a role in keeping many savings plans off track.

The secret is to save now and not put it off. Why? Because the sooner you start to put cash into a savings plan, the more time can help increase its value.

Be honest with yourself. Has the past few years slowed or stopped your savings efforts? Are you confused about investment options? If you have answered yes to these questions, it is probably time to rethink your savings strategy.

  1. Planning. The first step toward a better financial situation is deciding how much you want to amass and how long you have to do it.
  2. Commitment. Next, make a commitment to put money into a some sort of savings vehicle on a regular basis. Consider automatic withdrawals from your paycheck or checking account to make this happen.
  3. Tax Deferred. Take advantage of tax-deferred retirement plans and employer-matched savings plans available to you. This includes IRAs and 401(k) plans.
  4. Budget. Finally, resolve to be more practical with expenses. Establishing a spending budget is a good place to start. Budgeting websites like http://www.mint.com/ can make your budgeting easy and effective.

Watching your savings grow and knowing you’ll be able to pay for an important milestone is rewarding. Put time on your side by adjusting your savings approach now. Call us to discuss your budgeting strategies.