Glossary

CP21 Notice

The CP21 notice is issued by the IRS to inform taxpayers that changes have been made to their tax account. These changes can result in a new balance due or an adjustment to the refund amount.

Key points about CP21:

The notice details the specific changes made, including reasons for the adjustments.
It provides instructions for addressing any balance owed or claiming an adjusted refund.
Taxpayers are encouraged to review the notice and verify the changes.

Receiving CP21 helps taxpayers stay informed about their tax situation and ensure compliance with IRS requirements.

Recommendation

CP89 Notice

The CP89 notice notifies taxpayers of a change in their tax account status, typically due to errors or adjustments made by the IRS.

CP13R Notice: Recovery Rebate Credit Adjusted

The IRS CP13R Notice informs taxpayers that adjustments were made to the Recovery Rebate Credit claimed on their return.

CP3219B Notice: Notice of Deficiency with Right to Petition Tax Court

IRS CP3219B Notice alerts taxpayers of a tax deficiency and provides instructions for petitioning the Tax Court to dispute the assessment.

Back Taxes

Back taxes are unpaid taxes from previous years, and failure to pay them can result in penalties, interest, and collection actions by the IRS.

IRS Form 8857: Request for Innocent Spouse Relief

IRS Form 8857 is used to request Innocent Spouse Relief, which protects taxpayers from being held liable for their spouse’s tax debt.

401(k) Contribution Limit

The 401(k) contribution limit sets the maximum amount employees can contribute to their employer-sponsored retirement plan each year, offering significant tax benefits.

Amended Return (Form 1040X)

An Amended Return allows taxpayers to correct mistakes on a previously filed tax return by using IRS Form 1040X.

Bankruptcy and Tax Debt

Bankruptcy can discharge certain IRS tax debts, but it depends on the type of tax owed and the age of the debt.

IRS Form 656: Offer in Compromise

IRS Form 656 is used to apply for an Offer in Compromise, allowing taxpayers to settle their IRS tax debt for less than what they owe.

Installment Agreement (IA)

An Installment Agreement is a payment plan that allows taxpayers to repay their tax debt over time in monthly installments.