IRS uses several computer programs to screen all tax returns and check for math or clerical errors. If you receive a notice, respond within 60 days or IRS will assume you agree with the notice.
A math error notice isn’t an audit. The notice doesn’t usually mean you owe more taxes. IRS may need additional information. Perhaps a wrong Social Security number was entered or wasn’t entered at all.
If the math error notice isn’t correct, there’s no need to appeal. Just give IRS the correct information with documentation. If IRS agrees with your response, it will reverse the notice.
An example is when missing or incorrect Social Security numbers prevent dependency exemptions, the earned income tax credit, the child tax credit, education credits (or deductions) and the child and dependent care credit.
Of course if the wrong tax tables were used or the return has addition, subtraction, multiplication or division errors, it’s easy to see why the math error notice was received.
Another example is when there’s self employment income but the self employment tax wasn’t computed and reported.
Those IRS notices aren’t easy to read and understand. The first step is to read the notice carefully to understand exactly what IRS is proposing to adjust or change. Sometimes it helps to read the notice out loud.
Then you can gather the missing information or documentation and begin drafting the response. Some errors are because an incorrect Social Security number was listed. Just be sure to include a clearly written response that requests the correction. We urge the response be sent to IRS using priority mail so you can know when IRS received it.
Some notices just correct the amounts paid on estimated tax and/or the tax withheld. There are so many entries on a return, it’s easy to make a mistake.
The main idea is to not panic. Once you understand why the notice was sent, you can begin to see if it seems correct or not. Of all the math error notices sent, most are in the taxpayer’s favor!
If you used a tax preparer, give that person a copy of the notice. They may be able to do a response to IRS fairly quickly.
Did you hear? “Behind every argument is someone’s ignorance,” by Louis D. Brandies.
John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.