Okay, so you got a letter from the IRS, and it says “CP86” on it. Don’t panic! It’s just the IRS’s way of saying, “Hey, we need a little more from you before we can finish processing your tax return.” Let’s break down what this means and what you should do about it.
What’s the Deal with a CP86 Notice?
Imagine you’re handing in a school paper, but you forgot to fill in one of the questions. Your teacher might give it back to you with a note asking you to complete it. That’s kind of what a CP86 notice is. It means that when the IRS looked at your tax return, they noticed something was missing, unclear, or didn’t match their records. It’s not necessarily that you did anything wrong, but they need clarification to finish processing your return.
- The IRS is Like a Detailed Detective: The IRS has a ton of data from various sources (like your employers, banks, etc.). They use this to check if what you reported on your tax return matches what they know. If there’s a mismatch or missing piece, they’ll send a notice, like the CP86.
- It’s Not Always Bad News: A CP86 notice doesn’t automatically mean you’re in trouble or owe more taxes. Sometimes, it’s just a simple request for clarification. The key is to understand what they need and respond promptly.
Common Reasons for a CP86 Notice
So, what kind of information might the IRS be missing? Here are a few common culprits:
- Missing Forms: Did you forget to include a W-2, 1099, or Schedule C? This is a frequent reason for the CP86. The IRS needs all the supporting documentation to verify your income and deductions.
- Incorrect Information: If there’s a mismatch between what you reported and what the IRS has on file (like a wrong Social Security number or bank account number), they’ll flag it with a CP86.
- Unclear Deductions or Credits: If you claimed a deduction or credit without providing the necessary paperwork or explanation, the IRS may need more information.
- Incomplete Information on Dependents: If you claimed dependents but didn’t provide all of their information, like their social security numbers, that can also trigger the notice.
- Conflicting Information: Sometimes, there’s a disagreement between what you reported and the information from other sources they have, leading them to request clarification.
- Name Change: If you recently changed your name and it doesn’t match what they have on file, they’ll send this notice.
What Should You Do When You Get a CP86 Notice?
Okay, you have the letter in your hand. Here’s how to handle it:
- Don’t Ignore It: The worst thing you can do is ignore the notice. It won’t go away, and it could cause delays or issues with your return.
- Read it Carefully: Understand why the IRS sent the notice and what information they need. The notice will clearly state what’s missing or unclear.
- Gather Your Documents: Collect all the necessary documents or information. This might include:
- Copies of W-2s, 1099s, or other tax forms.
- Receipts and records for deductions or credits you claimed.
- Social Security cards for your dependents.
- Any other document the notice asks for.
- Respond Promptly: Follow the instructions on the notice on how to respond. Usually, you’ll need to mail in the requested information, either as a response to the address they specify, or by using the IRS website.
- Double Check Always double-check everything before you send it to ensure it is accurate, correct and readable.
- Keep a Copy of Everything: Before mailing anything, make copies for your records.
- Consider Getting Help: If you’re confused or unsure how to respond, it might be wise to seek help from a tax professional. They can guide you through the process and ensure you provide the correct information.
How to Avoid Getting a CP86 Notice
While there is no way to guarantee you will never get a notice, these tips can help:
- Be Organized: Keep good records of all your income, expenses, and tax-related documents. This makes it easier to prepare your return and avoids simple mistakes.
- Double Check Your Return: Before filing, review your return thoroughly to make sure everything is correct and that all required forms and schedules are included.
- Use Accurate Information: Make sure all your personal details, like your social security number, address, and banking information, are accurate and match what the IRS has on file.
- File Electronically: Filing electronically often reduces the chance of errors, as tax software can catch mistakes before submission.
- File on Time: Filing taxes on time or with a timely extension gives you the time you need to accurately prepare your return.
- Consider Using Tax Software: Tax software can often help guide you on what documents to include, and may point out common errors.
- If in Doubt, Ask For Help Don’t be afraid to reach out to a professional to help prepare your tax return.
Understanding Tax Deadlines
Even if you get a CP86 notice, it’s important to know these general IRS tax deadlines:
- Annual Tax Return Due Date: For most individuals, the tax return deadline is April 15th of each year.
- Tax Extension: If you need more time to file, you can request an extension by using Form 4868. This gives you until October 15th, but it doesn’t extend the deadline for paying any taxes due.
- Paying Taxes Due: Regardless of an extension, any tax you owe is due by the regular April 15th tax deadline (or the next business day if that date falls on a weekend or holiday).
CP86 Notice: Key Takeaways
- A CP86 notice isn’t a punishment; it’s just a request for missing information.
- Ignoring a CP86 notice will not make it go away.
- Respond promptly with accurate information.
- Keep good records and double-check your return before filing.
- Don’t hesitate to seek professional help if you need it.
Hopefully, this explanation makes the CP86 notice less intimidating. Remember, the IRS is just trying to make sure everyone pays their fair share, and sometimes they just need a little extra help from us. By staying organized and following the steps outlined above, you can handle any CP86 notice with ease.