Glossary

Tax Adjustment

0:00 0:00

100

A tax adjustment occurs when the IRS changes the information on a taxpayer’s return due to errors, discrepancies, or underreporting of income or deductions. Adjustments can result in an increase or decrease in the amount of tax owed, and they are typically triggered by:

IRS audits.
Underreported income detected through third-party reports (such as CP2000 Notices).
Mathematical or clerical errors on the tax return.

Taxpayers who receive a tax adjustment notice should review it carefully to ensure the IRS’s findings are accurate. If the taxpayer disagrees with the adjustment, they can file an appeal or request a reconsideration by providing documentation to support their original return.

Responding promptly to tax adjustment notices can help taxpayers avoid additional penalties and interest charges.

Recommendation

Form 2290 – Heavy Highway Vehicle Use Tax Return

Form 2290, known as Heavy Highway Vehicle Use Tax Return, is a crucial tax form for reporting and paying taxes on heavy vehicles operating on the highways.

CP21A Notice: Changes to Your Return; Balance Due

The IRS CP21A Notice informs taxpayers that their return was adjusted, resulting in additional tax owed.

Form 8917 – Tuition and Fees Deduction

Form 8917 – Tuition and Fees Deduction allows taxpayers to claim a deduction for qualified education expenses.

CP14H Notice: Health Coverage Tax Credit Balance Due

IRS CP14H Notice informs taxpayers that they have a balance due related to the Health Coverage Tax Credit (HCTC) and provides steps for payment.

Innocent Spouse Relief

Innocent Spouse Relief protects a spouse from being held liable for taxes owed due to errors or omissions by the other spouse on a joint return.

Form 8949 – Sales and Other Dispositions of Capital Assets (critical for crypto transactions)

Form 8949 is a key document for reporting capital gains and losses from cryptocurrency transactions for tax purposes.

Form 8971 – Information Regarding Beneficiaries Acquiring Property From a Decedent

Form 8971 is crucial for reporting inherited property to the IRS accurately.

CP75A Notice

The CP75A notice is sent by the IRS to request additional documentation to verify eligibility for Earned Income Credit (EIC) or other tax benefits.

Abatement

IRS Penalty Abatement reduces or eliminates penalties imposed for late filing or late payment, provided the taxpayer shows reasonable cause.

CP25 Notice: Refund Adjustment Due to Estimated Tax Payments

The IRS CP25 Notice informs taxpayers that their refund has been adjusted due to incorrect estimated tax payments.