Got a tax notice? Now what?

Ralph
00:00:00

Have you ever opened up your mailbox, saw an envelope from the IRS, and felt your stomach drop? Receiving a tax notice often feels like the world is crashing down for most people. You ask yourself, what does it mean? Did I do something wrong? Am I in trouble? Well, here's the good news. It's probably not as bad as you think.

And on today's episode, I'm going to talk all about handling those dreaded tax notices. Why does the IRS send these letters? What do they mean? And how can you handle them wisely? And most importantly, and this is the best part, how you can prevent them in the first place? Gabriel, one of our listeners, recently wrote in with this question. He said, "Ralph, I just got a notice from the IRS, and I'm panicking.

What do I do now?" Well, stick around today because we're answering that question and helping you face this challenge with confidence, with faith, and a solid plan.

Podcast Announcer
00:00:50

In a world where crushing debt keeps you trapped, where living paycheck to paycheck has become your new normal, and where the dream of retirement seems impossibly out of reach, there's hope. Join financial evangelist Ralph Estep Jr. A man who's walked through the fire of financial failure and emerged stronger on the other side.

Welcome to Ask Ralph, the show where real world experience meets biblical truth to break the bondage of financial despair.

Get ready to take control of your money, break free from the financial stress and align your resources with God's purpose for your life. This is Ask Ralph with Ralph Estep Jr.

Ralph
00:01:30

Well, welcome to the Ask Ralph show. I'm your host, Ralph, and I am so glad you're here today. Thank you for joining me as we explore how to achieve financial freedom while growing in our Christian faith.
And remember this, you're not alone in this journey. I'm with you. Together, we can tackle even the toughest financial challenges. Now, if you missed the show yesterday, we had an eye opening discussion on who's doing your taxes. And can you really trust them? If you missed it, I'm going to highly recommend you go check it out.
We talked about the importance of working with trustworthy tax professionals and how trusting the wrong person can lead to costly mistakes. So don't forget to catch up on that episode and with all of our episodes at askralph.com if you haven't already checked it out.
Now today's question comes from Gabriel who writes to us this. He says,
"Hi Ralph, I just got a letter from the IRS, and honestly, I'm freaking out. I've been paying my taxes every year, so why are they contacting me? Did I do something wrong? The notice says CP2000, and I have no idea what that means. I'm worried if I'm in trouble or that I'll owe a ton of money. Ralph, what should I do?"
Well, first of all Gabriel, thank you for your honesty. That wave of panic you're feeling? It's completely normal. Most people feel the same way when they get a notice from the IRS, or from their state, or maybe their city tax authority. But let me assure you, you're not alone in this and Gabriel, there is hope for this.
So today, I'm going to help you understand what this notice means. I'm going to explain to you why you got it in general and how you can respond confidently. I'm also going to share some tips to help you avoid getting these notices in the future.
Well Gabriel, let's talk about those emotions that come along with receiving that tax notice, because I think you keyed in on a thing that a lot of people deal with.
There's fear, there's confusion, you don't know what this is, there's that anxiety. Like you said, you're worried about what could this mean? Am I going to owe a ton of money? Maybe you feel guilty. Like maybe you're wondering, did I do something wrong? And you start questioning everything. You ask questions like, did I file my taxes wrong?
Am I going to owe thousands of dollars? Will they come after my paycheck or maybe even my house? And listen Gabriel, I've been where you are. Let me tell you, years ago, I got a notice for a discrepancy on my tax return. This is what I do for a living. And I remember my heart racing, my hands shaking, and that sinking feeling in my stomach.
I just didn't know what to do. But here's what I learned. And this is a truth statement. Most notices are routine, most of them are kicked out by a computer system, not by a person, and most of them can be resolved quickly when you respond appropriately.
Now, before we go any further today, I want to remind you, if you've got a question, just like Gabriel, and this show is all about answering your questions. If there's something on your mind, whether it's taxes, budgeting, or faith and finance, do me a favor, go to justaskralph.com and you can enter your question there.
And listen, while you're there, if you'd like to support the show, you can buy me a cup of coffee. Now, this isn't a real cup of coffee, because if you listen to me, you know I don't even drink coffee. I drink a hot tea, but not a coffee. But we partnered with this company called, Buy a cup of coffee and it's a virtual way to support the show.
And if you feel compelled to do that, I would love for you to do it so we could reach more people. If you go to askralphpodcast.com/support, you'll just fill in the blanks there and it could be a one time or you can even set it up for a monthly support. Just again, go to askralphpodcast.com/support. And I want to be clear. It's not a donation. We are not a charity. So it is a support.
Well now, before we get into the nitty gritty of IRS notices, let's take a moment to reflect on God's word. I always like to start the show because I believe scripture has the power to calm our fears and it gives us wisdom for challenges just like this, Gabriel.
So today's verse is coming to us from Philippians chapter 4, verses 6 and 7. And it says this. "Do not be anxious about anything, but in every situation, by prayer and petition, with thanksgiving, present your requests to God. And the peace of God, which transcends all understanding, will guard your hearts and your minds in Christ Jesus."
Now, if you think about it for a second, Gabriel, this verse reminds us that even when life throws us curve balls like that tax notice you got, you know, you weren't expecting to go to the mailbox and have that. But this verse reminds us that we don't have to panic. The first thing we can do, and I'm going to encourage everybody who's listening today, the first thing we can do is we can bring our worries to God and trust.
And this is the biggest part of that. And trust that He will guide us through this because here's the truth. Anxiety doesn't have to control us. It's real easy to have that fear. Like we talked about that anxiety, that worry, you're wondering what's going to happen. But anxiety does not have to control us, but God's peace can.
Now, before we get started today, I just want to take a moment to say how grateful I am for each of you as well. Whether you're tuning in for the first time or you've been with me for a while, thank you for allowing me to be part of your financial journey.
It means so much to me that you trust me with your questions, you trust me with your struggles, and you trust me with your victories. Listen, I know managing finances, especially when life throws curve balls, like a tax notice isn't easy. And I do this every day. So I get it. You don't do this every day, but the fact that you're here, the fact that you're taking steps to learn, you're taking steps to grow and you're taking control of your financial future is something I deeply admire and appreciate.
Because here's the truth. Every time I read your questions, every time I hear your stories and I see the progress you're making, it reminds me why I started this show in the first place. Because it's not just about numbers or taxes. It's about helping real people. Helping real people just like you find peace, find that clarity and hope in areas of their life that can feel overwhelming.
So I just want to say this. I thank you for showing up, I thank you for being vulnerable and Gabriel and others I thank you for allowing me to walk alongside you in this journey. And I pray that the tools, the insights and the encouragement you find here continue to bless you and your family. And always remember, you're not alone in this. Together, we can navigate whatever challenges come your way. From the bottom of my heart, thank you so much for being part of this community because listen, you inspire me every day. So let's get to today's show and Gabriel let me unravel this for you.
So let's start by asking a real simple question.
What does a tax notice mean? Well, here's the thing you need to understand.
Most tax notices are not a sign of wrongdoing. The IRS send notices for several common reasons. People hear that word audit, they hear that notice and they assume, Oh, I'm going to jail.
I must've done something wrong. But there are a ton of reasons why the IRS sends notices. And I just want to go over a couple of the most common ones. The first one is this. Errors and discrepancies. This is where there's some kind of error made, the information the IRS has and the information you have is different.
Let me give you a couple examples. Let's say for example, you had made a math error on your tax return. Now I got to be honest with you, now that we're doing most of our tax returns, I mean, I don't know anybody personally that does their return on with a pen or a pencil and paper and sends it in.
Let's just say that you made a math error. A lot of times these letters will just be simply a simple math error. They're going to adjust your refund, or they're going to tell you that you owe something because of a math error. Another example of these are return errors where figures didn't match information from employers or banks.
So one of the things that you need to understand is your employer, let's say you're a normal W-2 employee. You get a copy of your W-2. You put that copy of that W-2, you put that information on your tax return. Well, your employer is also reporting that information to the IRS. Well, if the IRS sees that the information reported by your employer and the information put on your return is different, then there's a match issue.
I mean, I'd tell you one day, I'll tell you a funny story. A listener once shared with me, they accidentally entered the wrong amount for a charitable donation and they didn't realize when they did it. They put it into the tax software and they didn't pay attention to it. And of course the IRS just sent a notice and said, wait a second, something doesn't seem right here in this particular case.
As I recall, they meant to put $2,000 for the valuation of some non cash donations, but instead they put $20,000, which inflated their itemized deductions and I think they should have caught it. But the IRS certainly looked at, they said, well, wait a second, this doesn't make any sense. And I'll talk more about audit red flags on tomorrow's show.
But it wasn't a big deal. They got the notice. They got the correct documentation and the issue was resolved quickly. Now in that particular case, they ended up owing a little bit of money because they had taken a bigger deduction than what they were entitled to. But that's the kind of thing I'm talking about.
So that's those first things, errors and discrepancies. Second thing. And this is probably the preponderance of the notices I see. And that's what I call the outstanding balance notices. Now most of the time, they come out on what's called a form CP14. And it's a real simple notice. It just says, Hey, Ralph, guess what?
We got your tax return. That's fantastic. We agree with all your things, but there's a little problem. You forgot to pay us. So they're just going to send you a notice that says, Hey, you have an unpaid balance. I remember working with a small business owner a few years ago and he had ignored these CP14 notices and they kept sending them.
They kept sending them and he just ended up getting whaled with penalties and interests and all that kind of stuff because he didn't think about, well, you know what? I do have this balance with the IRS and I've talked about it on other shows. You can set up a payment plan with them. Why not do that and stop those penalties from continuing to accrue.
So number two thing, common notice, outstanding balance notice. Another common notice. Information requests. I see a lot of these times, I see a lot of these with identity verification requests. For example, I had a teacher client once received the notice to verify her identity before her refund was issued.
Because there was a question about her having her identity stolen. I did a show about that last week. I'm going to encourage you to check it out if you missed it. But in that particular case, she got a letter from the IRS and the IRS says, wait a second. We think we see something strange here. And to be honest with you, all she had to do was send in the requested documents and then her refund arrived in a few weeks later.
Now it's not a simple process. It does take time because in her particular case, someone had filed a tax return with her same information, or at least her name and social security number and that sort of thing. So the IRS just wanted to make sure before they sent this refund that they were sending it to the right person.
So that's the third thing, information requests. Now this is a letter that annoys a lot of people and it's number four on my list and it's called processing delays. And I get these, these are really prevalent during COVID. You get a notice that says simply, Hey, we received your correspondence, but we need to tell you, we're going to need another 45 days.
We're going to need another 60 days. We're going to need another 90 days. And that's, that all has to do with the inner workings of the IRS and that they have to be forthright and tell you when things are going to be processed. But these are really just informational. They don't require any action.
They're just telling you, listen, we haven't had a chance to resolve your issue yet. And unfortunately, I've seen these things take on a life of their own, where they just continue to prolong this, and prolong this, and prolong this. So those are really the big four. Number one is the errors and discrepancy.
Something is different than what they got. Number two, they're telling you, you got an outstanding balance. Number three, they're asking you for more information or number four, those processing delays.
So I thought now the best thing to do would be to talk about some of the most common IRS notices.
We started by talking about the themes of those, but let's jump into the actual notice numbers. Because one of the things that you mentioned Gabriel was the CP2000 notice. And this is probably the notice I see the most go out. And a CP2000 notice, and you'll know that because it says it at the top, it'll have your name.
It'll have the year in question. It'll say notice number CP2000. Now CP2000 notice just indicates a discrepancy between your tax return and the information from a third party. Somebody who reported information. As an example, I had a contractor client once. Now in his tax return, he reported that he had received $50,000 in income.
But here's the problem. The IRS actually got a 1099 from the person who issued it for the contractor for $55,000. So the IRS said, wait a second. You said 50. They said 55. Not a big deal. But the issue was resolved when the contractor provided additional documentation to explain the difference. In that particular case, as I recall, and it's been many years ago, it was simply a situation where the person that issued the 1099, the payer had put down $55,000.
Well in that particular case, there was $5,000 worth of materials that were purchased. So those $5,000 in materials we're added to the 1099, but when the contractor put the information on the return, he only told me, Hey, my income last year was $50,000. So looking back at it now, what we had to do was we had to say to the IRS, Oh, okay.
We understand this now. We put the net amount, not the gross amount. So it was an easy thing to fix. It was resolved without any penalties and on we went. So that's the first one. That's that CP2000 notice. The next most common notice is the CP501 notice. And that's simply a reminder that you've got an unpaid balance.
Kind of like that credit card statement you get every month. Say, Hey, Ralph, guess what? You still owe us X number of dollars. And so I'll give you an example of that. I had a school teacher client and she received one of these CP501 notices because her employer had underwithheld her taxes. And when she did her tax return, she ended up owing money.
Well the IRS, you know, she did a return, sent it in, but she didn't send a payment in because she said, Ralph, I can't afford to pay them. So they sent this CP501 notice and they said, Hey, guess what? You still owe us money. What are you going to do? Well, the resolution was really simple.
She just reached out to the IRS and she set up a payment plan with them and that resolved the issue. Now she had to make her monthly payments and she did continue to pay penalty and interest because you owe the tax when it's due. So watch out for those. That's a CP501. Now, if it gets a little more serious, they move into what's called the CP503 notice.
It's what they call the second notice for that same unpaid balance. And this one's like, you know, the first one's a knock at the door. The second is like a little bit harder knock at the door. It's more urgent. I had a client named Tom. Now Tom had gotten the CP501 notice and then he received the CP503 warning.
And all he did was he contacted me and said, Ralph, what do I do? It wasn't complicated. Again, he ignored the first one, which is what he shouldn't have done. He should have gotten in touch with me right away. But when he got in touch with me, all I did was talk to the IRS. We negotiated a manageable payment plan.
But again, he got this notice and Gabriel, you're thinking, Oh, this could be one of those things too. So that's the CP501. So excuse me, the CP503. So the first one was the 501. Hey, knocking at the door. The second one is that CP503. Hey, it's a little more urgent. Now the next one they send you, this better get your attention.
And that's the CP504 notice, which is a notice of intent to levy. Basically at this point, the IRS is saying, Hey, you ignored our first notice. You ignored our second notice. Well, guess what? Things are fixing to get real interesting now. And they're going to start to look at levy in your account, maybe filing tax liens.
I had a client, Lisa, she was a contractor and she received one of those 504 notices after ignoring earlier notices. She came in to meet with me and she goes, Ralph, this came out of the blue. I don't understand what could have happened. And all of a sudden I got this notice would intend to levy.
And I said to her, I said, wait a second. So what, and this wasn't a client of mine at the time. She became a client when she got this notice. And I said, wait a second. I said, so what you're telling me is that you were not aware that you owed the IRS. Oh yeah. I remember. Yeah. Yeah. When the guy did my tax return, it was one of those like strip mall places.
And he says, Oh, he just send it in because then you're in compliance and you could just pay him when you get a chance. I said, so, okay. So you knew you owed them money. I said, did they send you any notices? You know, Ralph, I, when I get stuff from the IRS, it's so confusing to me. I just kind of put it in the drawer.
I said, well, do you think they might've sent you some other notices? Well, I think they might have. So yeah, in this case she had ignored them. She had ignored the first notice. She'd ignored the second notice. Well now she got to the intent to levy. And here's the problem. What people need to understand when you get to this point, the IRS can go and attach your wages.
They can send a letter to your employer and say, Hey, guess what? Before you pay Sally, pay the IRS first, or they can go to your bank and they can send you a bank letter and say, Hey, whatever's in Sally's account, swipe it for us. So that's not something you want to let go of. Now, because the IRS isn't going to act directly on that CP504 intent to levy notice.
It's usually a 90 day notice. They actually have another notice. And that's the LT. We're getting serious now. The LT1058. And this is the final warning before levy actions begin. So think about it. You filed a tax return. You knew you owed money. You got the 501 notice says, Hey, guess what? You still owe us money.
You got the 503 notice that says, Hey, knock, knock, knock. I'm hitting harder now. You still owe us money. You got the 504 intent to levy notice. And now you're getting this LT1058 that says, Hey, this is the final warning. Like the alarm bells are going off. The sirens are going off. I had a client I worked with a few years ago.
He's a retired veteran. His name was George and he received this 1058 for unpaid rental property tax. He had a rental property and again, filed his tax return and hadn't paid a debt. Well, then I find out George had become disabled. He had a terrible debilitating illness. So we came in, we sat down, we worked together, we worked out what's called an offer in compromise.
And I did a show about these tax settlements a few weeks ago, but in this particular case, George had a legitimate reason why he couldn't pay them. I helped him. We worked out an offer in compromise. We reduced his debt and that issue came to resolution. So that's the big collection notices. Now there's also a thing called a CP23 notice.
And this is sent when there's a mismatch between estimated tax payments and what the IRS has on file. We see these a lot. Now I did a show, I think it was about a week ago on you know, wait, I have to pay estimated taxes. Well, when you file your tax return as part of that filing, you're going to take a list and you're going to say to your IRS, okay, let's use a simple example.
Let's say that you sent in quarterly $1,000 payments throughout the year. So you sent in $4,000. So at least that's what you thought you sent in. You do your tax return. You tell the IRS, you know, on April 15th, I sent a thousand, on June 15th, I sent a thousand, on September 15th, I sent a thousand, and on January 15th, I sent a thousand.
So you file your tax return. Well then, the IRS gets your return and go, wait a second. Yeah, we see the first three payments, but we're not seeing that fourth payment. So they can send out this CP23 notice to say, Hey, wait a second. There's something going on. Like I worked with, a lady named Amanda.
She was a freelance writer and she had a situation where when she figured out her estimated taxes, she simply had forgotten to go online and make that final payment. No big deal. She got the notice, said, Hey, guess what? You made a mistake. She went online, she paid the notice and the issue was resolved.
She never got another notice. She didn't get those intent to levy notices and all those types of things.
So now you understand why the IRS is sending you a notice, you understand what those notices look like now, here's the most important part. This is like the meat and potatoes of what we're gonna talk about and that is Ralph, how do I handle a tax notice and Gabriel, this is coming right for you. First thing. Number one thing you want to do is read the notice carefully. Read it carefully. Don't panic. Don't freak out. Don't turn on the waterworks. Just read it thoroughly and understand what the IRS is asking you. And I guess it was about a year ago, I did a show about how to negotiate with these, what the IRS is really saying.
It used to be the IRS notices were about, it's like reading cryptology. It was tough to figure out. But now to be honest with you, the IRS notices are really pretty straightforward. For example, they're going to tell you, Hey, you still owe us money. It doesn't take a rocket scientist to figure that out. So read the notice carefully, understand what the IRS is asking you for.
And if you don't understand it, we'll talk about that in a few minutes. Number two thing, identify the issue. Look and see, is it a balance due? Is it a discrepancy? Is it missing information? I'll tell you a really funny story. I had a client get a notice. And I had done their taxes for years and they called into the office and they said, Oh, I got to talk to Ralph right away.
We just got a notice that say, you know, I don't understand what it says, but the IRS is coming after us. Well, one of the things that we do in our office, I say to my staff, I said, look, I'm not going to do anything until you actually send me over the notice. So I can look at it because I've been down this road before.
And in this particular case, they sent over the notice. Well, guess what? It wasn't from the IRS at all. It was actually from the state of Delaware. Now they still had an issue that they needed to resolve, but it wasn't an issue that they couldn't get past, but they, we needed to identify that. So that's the first thing, read the notice carefully, identify the issue.
A big thing you want to identify is what tax year they're talking about, because everybody just assumes that if they get a notice in 2025, well, that must be for my return I just filed, but so as I mentioned on yesterday's show, a lot of times you won't get that notice till 18 months, maybe 24 months after, and the IRS is really good about putting what tax year it is.
So identify the issue. Next thing you want to do. Once you've read the notice, you've identified the issue, then gather your records and take a look at that notice and compare it to your tax return and those supporting documents you have. Like for example, that client that had made that error on entering their charitable contributions. When they pulled out their records,
they looked at what the IRS said. They go, Oh, wow. Look what I did. Obviously I made a keying or they hit an extra zero. So instead of $2,000, it was $20,000. So that issue was really pretty easy to resolve and they didn't have to do much to resolve it. So compare your notice to your tax return and look for those supporting documents.
Now I'm making an assumption here. I'm making an assumption that you're not a criminal and you haven't been lying on your tax return. If you did that, that's a whole another story. So again, read the notice, identify the issue, gather the records and number four, and this one is crucial. My client to put it in the drawer.
Don't do that. You got to respond promptly. I'm not saying respond within 10 minutes or two days, but you got to respond. Ignoring it was, is only going to make the things go worse. So respond within the deadline. Every IRS notice will give you a deadline. They'll tell you, we need your response by X date.
There's a lot of things you can say about the IRS, but one thing you can say about the IRS is that they give you dates. So make sure you respond properly. You don't bury it in the drawer and say, Oh, this will go away. It's not going away. So that's the next step. The fifth step. And it's what I want to encourage you strongly to do. Seek professional help
if you need it. Because most of the time, when you get these notices and it doesn't jump out of it's not that charitable contribution that's obvious, it's not that you have a new child and you put the social security number wrong on the tax return. If it's something bigger than that, now's the time to bring in help.
I talked about that on Monday. You know, when is it time to find somebody to do your tax return? I'm going to say the same thing here. When you get that notice, maybe you've gotten to the point now it's time to bring in somebody to help you because the truth is people like me, tax professionals, can provide guidance and represent you.
Sometimes you don't want to do this on your own. I think there's an old adage that says, you know, something about an attorney that, you know, they a fool for a client if they represent themselves. I'm not calling you a fool, but listen, this is what we do every day. You do a tax return once a year.
I do tax returns 10 times a day. So that's the fifth thing. And the last thing, just like we talk about intentional spending, we talk about budgets. It's time to make a plan. You've read the notice. You've identified the issue. You've gathered your records. You responded promptly. You didn't just put it in the drawer.
You seek, you sought help if you needed it. Now, it's time to make a plan. Listen, if you owe money, you're going to pay them. Explore options, explore payment plans. If you are in that situation, like that fellow that I work with who was a veteran, he can't afford to pay. Maybe you're going to look at an offer and compromise, but I warn you. Be careful of those scammers out there telling you they're going to settle your tax debt for pennies on the dollar.
I did a show about that last week. So that really is the big things.
So now we've covered like, what are the main things the IRS talks about? What are the notices you get? And then, you know, what is the plan to handle that? Well, so one of the things I think I want to spend a couple of minutes on today is, well, how can you avoid these notices in the first place?
How do you avoid them in the future? I'm really going to give you a couple of things. Number one thing, double check your return. Even if you do it online, like that $2,000 to $20,000 charitable contribution, only thing that person had to have done was actually look at their return. So double check it, avoid errors by reviewing your math, review your figures.
Like I said, if you're using software, the math isn't going to be the issue, but maybe you forgot to put something on the return. I had a client a few years ago. This was a great story. Young couple come in, and they've got this IRS notice, I'm looking at this notice and I'm saying, okay, you owe the IRS, you know, $10,000. And I said, tell me what happened.
They said, well, you know, Ralph, we always do our own taxes. We got the Turbo tax and I'm not picking on TurboTax and when we did our return, somehow Ralph, we got this huge refund. Now, usually we owe a couple thousand dollars because you know, we keep our withholding kind of low because we're raising a family.
And I said, okay, well, so I'm looking at this notice and I'm saying, explain something to me. I said, when I look at this notice, it looks like you took both itemized deductions and standard deductions. And the husband looks at me and goes, yeah, well, that's what the TurboTax told us we could do. And we were just, oh, this is great.
We've never been able to do this before. Well, that's wrong. So now all of a sudden they had gotten this $8,000, I felt so bad about this. They had gotten this $8,000 refund. And they said, Ralph, we were just amazed that we were even getting this refund. We figured, oh, we finally figured out how to do our taxes
right. And I'm looking at this notice saying that they owe $10,000 and guess what? They did owe $10,000. So now not only had to pay the $8,000 back they got, but they owed an additional $2,000, which is the normal thing. So if they had looked at their return and said, wait a minute, our income's the same this year, or close to being the same, our deductions are the same.
Why in the world do we have this huge refund? So double check your return. Second thing, file on time. I'm going to talk about this next week in a show about if you can't pay, even if you can't pay, if you don't have the money to pay, file your tax return on time to avoid penalties because there's two penalties.
There's a failure to file penalty and there's a failure to pay penalty. Well, if you can file your return on time, even if you owe, you'll avoid that penalty for failure to file. Now you're still going to owe them because you owe them on the date to return is due, but file on time. Third thing, and it's a big picture thing.
Keep accurate records. This is crucial. Organize your records, you know, make responding to them easier. You know, a lot of people don't understand this. When you file your tax return, when you sign that return, or you electronically filed, you're basically saying to the IRS this. The IRS code actually says this. You agree that you have the documentation in your possession at the time you file that tax return.
A lot of people don't know that. They'll say to me. Oh Ralph, you have mileage log. Yeah, i'm not worried about that. If I get audited, I'll figure it out when I get it or same thing with charitable contributions. It's a big one. I'll say to him, okay, well, how much did you do? Well, you know, Ralph, we moved and the kids went away and then we did this.
We gave a ton of stuff to charity. I said, okay, well, do you have receipts? Yeah. Yeah. Ralph, I'm not worried about that. Nobody gets audited. And then you get that letter and they say, you got 30 days to prove this thing. So that's why you've got to have accurate records. Another thing I'm going to encourage you to do.
And this surprises some people. Verify your withholding. And you might be saying, Ralph, what are you talking about? I don't know how many people I meet on a daily basis that do not look at their pay stubs. And then they get to the end of the year, they come in and get their taxes done. I look at their W-2 and I say, Mark, what happened with your tax withholding?
Well, what do you mean? I said, it says you had zero federal withholding. And then, Oh yeah. You know, it's funny you say that Ralph. I thought it was weird. I started getting like an extra $500 per pay in my paycheck. Is that a problem? Like, yeah. So now you owe a ton of money. Why? Because you didn't look at your real withholding.
Somebody at their employer had made a mistake and they made them exempt from federal taxes. Now they still had paid their social security Medicare tax, but they made them exempt from the standpoint of their federal withholding. So I had to tell him, I think, 7 or $8,000. But again, it would have been avoided if they looked at their paycheck.
And the final thing, it's been kind of the whole point of this week. Consult a professional. You know, if you've got complex situations, we talked about this on Monday. Don't risk that. Don't leave it to chance. If you've got a complex situation, work with a tax expert, look for someone like me, and I'll talk to you in a little bit how you get in touch with me.
I know we covered a lot today. I just want to mention at this point, I do write a daily blog post. So every day when I do the show, there's actually a blog post where I go a little deeper, believe it or not, there's actually more to say on the topic. I give you some resources, some reference material, and you can get to those by going to askralphpodcast.com/blog. Again, every day we have one. If you missed an episode and you don't have time to go and listen to it, or watch it, you can go and read the blog.
Well, we've gotten close to the end of the show. Let's talk about some reflection questions that we covered a lot today.
And I just want to give you three reflection questions so you have some key takeaways. Number one thing. Like Gabriel, have you ever received a notice from the IRS and how did you handle it? You know, what did you do? Did you panic? What did you learn from that process? So if you ever received a notice from the IRS or from the state or your city or your local tax, how did you handle it? That's first one. Second one, what steps can you take to better organize your financial records? So if you get those notices, like I said, be prepared, have your documentation ready. Ask yourself, what steps can you take to better organize your financial records? And the third thing. Show's all about Christian faith and managing your money God's way.
So the third thing is how does trusting in God's provision help you respond to financial challenges? Because I think that's one of the key takeaways today, Gabriel, ask yourself that question. You know, how does trusting in God, can you say when you get that notice, God, I know you're going to show me how to figure this out.
Now, like I said, I'm making a huge assumption here that you're honest and you've done the right things. So ask yourself that question. How does trusting in God's provision help you respond to financial challenges?
Well, let me ask you this. So maybe you're just like Gabriel, you received the notice from the IRS and it's left you feeling anxious.
It's left you feeling confused or even dare say overwhelmed. You know, that sinking feeling in your stomach, that fear of what could happen next. And trust me, it's something so many people experience, but here's the truth. You don't have to face that alone. Imagine having someone in your corner who understands what you're going through and can guide you step by step to resolve the issue.
Well, guess what? That's why I'm here. If you've received a tax notice and you're feeling stuck, or you're feeling scared, or you're unsure about what to do next, I want to help you. Whether it's at CP2000, like Gabriel, a CP504 notice of intent to levy, or even something else. I didn't go through all the notices.
I'd have been here for two days. Or even something as simple as a request for clarification. You don't have to handle it by yourself. See, my goal is to take the stress and uncertainty off your shoulders and give you clarity. I want to give you confidence. And most important, I want to give you a plan of action. So you can book a one on one session with me.
Just go to askralph.com. And here's what we'll do together. First thing we'll do, we'll break down the notice so you fully understand what it means and why you received it. Then we're going to review your specific situation. We're going to look at your tax return. We're going to look at your financial records and anything else the IRS may be asking for.
And I'm going to help you develop a response. And third, and this is an important part, I'm going to help you create a step by step plan to respond to the notice effectively and efficiently. Whether that means providing documentation, maybe that means, Hey, yeah, I do owe the IRS money or the state, help you make a payment plan.
Or maybe it's an error you're going to dispute. Like that, you no, they are wrong, Ralph. I can help you with all that. So Gabriel and anyone else listening, I want you to know this. I've said this a few times now, you're not alone in this. Trust me. I get it. I do this every day. IRS notices can be intimidating, but hear me.
They're not the end of the world. You've got someone here who not only understands the technical side of taxes, but I get the emotional and the spiritual toll these financial challenges can take. So reach out to me. Again, that's at askralph.com schedule a consultation and together we'll turn what feels like a mountain into a manageable hill. And if you're finding value in the show, please take a moment and share it with someone who might be struggling with their finances.
Maybe, you know, somebody who is struggling with their taxes, you know, just send them to askralph.com, because you never know, the information we share here, what we share today, what we share on our episodes every day might be exactly what they need to hear. And remember, again, you don't have to face financial challenges alone.
I'm here to walk with you every step of the way. So let's tackle this together and find peace in the process.
Well today, we tackled the fear and confusion that comes with receiving a tax notice. We talked about those common IRS notices, what they mean, how to handle them, and more importantly, how to handle them with confidence and faith.
Remember, most notices aren't as scary as they seem. They're not the devil at the door. And with the right approach, you can resolve them quickly. Now tomorrow, we're going to have a totally different discussion. We're going to talk about, "Could your tax return be raising audit alarms?" I'm going to talk about the things that you might be doing on your tax return which are setting off those alarm bells.
So you don't want to miss that one. And remember this as I close today. My passion is to help you achieve financial success. I want to see you live out your dreams. And I want to see you grow in your faith and I know together, working together, we can master your finances from that Christian perspective. So as I always say, stay financially savvy out there and may God bless you abundantly.

Podcast Announcer
00:36:53

Thank you for joining us on the Ask Ralph show, and with a simple click to subscribe, we'll invite you back to our next episode. And remember, financial issues don't have to be complicated. Just Ask Ralph.

The information contained in this episode of Ask Ralph is based on data available as of the date of its release. Saggio Accounting Plus and Ask Ralph Media, Inc. Is under no obligation to update this content if changes occur.

Applying this information to your specific situation requires careful consideration of all facts and circumstances, and any information provided is not to be considered as financial, tax or legal advice. Please consult your tax advisor or attorney before acting on any material covered.