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If I Got an IRS Notice CP90, What Now?

When the IRS sends you a notification, it can stir up feelings of unease, particularly concerning significant issues such as potential tax collections. Among these notices is the IRS Notice CP90. Knowing how to interpret and react to this notice is essential. Here is a detailed manual on the steps to take upon receiving IRS Notice CP90.

What’s IRS Notice CP90?

Upon receipt of IRS Notice CP90, also referred to as the Final Notice of Intent to Levy and Notice of Your Right to a Hearing, individuals are informed by the IRS that there are outstanding tax liabilities that need to be addressed.

In this letter, it is brought to your attention that the IRS is issuing a last cautionary message declaring their plans to seize your assets, including income, financial accounts, and other possessions, to settle your outstanding tax obligations. Additionally, you are being formally notified of your entitlement to initiate a Collection Due Process (CDP)

IRS Notice CP90

What Is IRS Notice CP90 For?

Upon receiving IRS Notice CP90, it signals that there is an outstanding tax debt that has not been resolved despite previous collection efforts. This particular notice is issued following a series of previous notifications urging payment, and it serves as a warning that more forceful collection measures, such as levies, are on the horizon unless prompt action is taken.

Steps to Takes When I Receive IRS Notice CP90

Thoroughly Understand My IRS Notice CP90 

Before doing anything else, carefully review the notice provided. It is crucial to go through it comprehensively to grasp its information. The notice will outline the outstanding balance, the specific tax periods under review, and the date by which a response is required. It is imperative to note the deadlines and carefully follow any guidelines outlined in the notice.

Verify the Details

Before proceeding, it is important to confirm the accuracy of the information provided. Take the time to carefully review all details in the notice to make sure there are no discrepancies. Check that the specified tax amount is correct and that the notice is indeed intended for your attention. Should you identify any inaccuracies, feel free to reach out to the IRS promptly to resolve any issues.

What Are My Options

What Are My Choices?

After verifying the correctness of the notification, take some time to explore the possible ways to settle the outstanding debt.

Pay the Amount Owed.

To settle the outstanding balance, it is advisable to remit the entire sum specified in the notification promptly to prevent additional charges and accruing interest. Payment options include settling the debt through the IRS online platform, over the phone, or by sending a check or money order through the mail.

Set Up a Payment Plan

Establishing a payment arrangement if you are unable to cover the entire sum owed, contemplate arranging a payment schedule with the IRS. By doing so, you can conveniently make regular payments to settle your tax obligations gradually.

Offer in Compromise

For individuals facing financial constraints in meeting their tax obligations, an alternative solution is an Offer in Compromise (OIC). This specialized program provides the opportunity to resolve tax debts for a reduced amount if certain qualifying criteria are met, offering relief to those unable to pay the full sum or arrange a payment plan.

Request a Collection Due Process (CDP) Hearing

To initiate a Collection Due Process (CDP) Hearing, you are entitled to request the hearing within 30 days of being served with Notice CP90. This opportunity enables you to discuss your situation with an IRS representative and consider different options for resolving the levy.

Request a CDP Hearing

To initiate a CDP Hearing, submitting your request within 30 days of receiving the notice is essential. Fill out the Tax Form 12153, also known as the Request for a Collection Due Process or Equivalent Hearing, and forward it to the specified address on your notification. Once a timely CDP hearing request is made, the levy process will be temporarily paused until the hearing is held and a determination is reached.

Consult a Dedicated Tax Professional

For professional assistance regarding IRS Notice CP90, it is essential to seek tax advice from an dedicated tax professional. The implications of receiving this notice are significant, and dealing with the associated procedures can be challenging. To effectively address this matter, it is advisable to engage a tax professional like a certified public accountant (CPA) or a tax attorney. They possess the expertise to clarify your choices, assist with documentation, and advocate for you in discussions with the IRS.

Do Not Delay

Act promptly without delay. It is crucial to promptly address the notice, no matter which path you decide to take. Disregarding the IRS Notice CP90 could lead to serious outcomes, such as the confiscation of your belongings and additional monetary fines.

Save My Tax Documentation

Ensuring thorough documentation is essential in managing interactions with the IRS. It is important to retain duplicates of all communication exchanged with the IRS, encompassing official letters, payment records, and any completed forms. The significance of maintaining accurate documentation cannot be overstated, especially when needing to challenge assertions or address potential concerns down the line.

What Happens If I Don’t Respond?

Neglecting to address IRS Notice CP90 can result in serious repercussions. The IRS has the authority to take action by garnishing your wages and seizing your assets. This could involve the IRS deducting a percentage of your earnings directly from your employer in order to settle your outstanding tax obligations.

Should individuals fail to settle their tax debts, the IRS may resort to freezing and confiscating funds from their bank accounts. In more severe instances, the IRS has the authority to seize tangible assets such as properties or vehicles to offset the outstanding amount. Disregarding such notifications will not alleviate the debt, potentially leading to adverse financial consequences.

Tax Help for Those Who Received IRS Notice CP90

When faced with an IRS Notice CP90, it’s natural to feel overwhelmed, but it’s important to approach the situation with a clear mind and a proactive attitude. Exploring the available solutions, enlisting expert support, and swiftly responding can empower you to tackle the notice head-on and progress in managing your tax obligations.

By taking the initiative now, you can avoid exacerbating financial troubles and take charge of your financial well-being. Dedicated tax professionals at RapidTax are committed to assisting you in tackling and resolving any tax issues you may have encountered.

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Common Tax Audit Fears

Let’s address some misconceptions and common fears about tax audit. While IRS tax audits can seem daunting, they often do not live up to the exaggerated tales surrounding them. Let’s delve into and dispel prevalent misconceptions about tax audits to reveal the truth behind these processes.

Tax Audit Fear 1. IRS has Superpowers, knowing everything you do.

In truth, the IRS possesses minimal details about an individual, primarily relying on annually submitted forms that disclose income, health insurance standing, and tax-deductible costs such as mortgage interest.

Upon submitting your tax return, the ensuing details are provided to them. The synchronization between the information disclosed to them and your own report typically sparks the initiation of audits.

Tax Audit Fear 2. Certain Tax Deductions are a Trap

Some individuals miss out on important tax deductions, like those related to running a home office, out of fear that claiming them might attract unwanted attention from the IRS.

In recent times, the concept that once held true is evolving – a growing number of taxpayers engage in remote work from the comfort of their homes. Recognizing this shift, the IRS now acknowledges the importance of home office deductions, leading them to create a simplified process to ensure eligible taxpayers benefit from this deduction.

tax audit

Tax Audit Fear 3. If it is a letter from the IRS, then it is an Audit

It is a common misconception among taxpayers that every communication they receive from the IRS signifies an audit. However, this is only sometimes the case. The IRS may also send a letter for various other reasons, such as informing you of a balance due, changes to your refund, verification of your identity, corrections made to your return, processing delays, or queries regarding your tax return.

Tax Audit Fear 4. I will get locked up if I report something wrong.

It is a rare occurrence for individuals to end up in prison without having engaged in significant fraudulent activities. Usually, when errors are made, taxpayers can expect to have their tax returns adjusted, leading to a required payment, fines, and penalties.

Tax Audit Fear 5. An audit will always cost you money.

Prepare to be surprised, for each year; numerous taxpayers emerge from an audit to discover the government owes them. Furthermore, a significant number of audits conclude with the IRS confirming that all is in order, resulting in no alterations to the tax amounts.

Can I Disagree and Appeal to an IRS Audit?

In the event that you find yourself in disagreement with the outcome of an IRS audit, a 30-day window is usually provided for you to file an appeal. The avenue for appealing lies with the IRS Office of Appeals. Commencement of this 30-day appeal period is triggered by the correspondence outlining the proposed changes to your tax return if your audit was conducted via mail. It is essential to submit your appeal within this timeframe to safeguard your right to appeal.

When reflecting on your financial decisions from the previous year, rest assured that RapidTax will ensure they positively impact your tax return. Whether you prefer to handle your taxes independently or entrust them to a RapidTax dedicated Tax Professional, we promise to maximize your refund and ensure you receive all eligible tax credits.

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6 Tips for Tax Saving Parent for Tax Filing in 2024

When it comes to maximizing tax saving for parent and other taxpayers with dependents, the Internal Revenue Service (IRS) provides various deductions and credits. Here are six essential tips for filing your taxes to ensure you benefit from these tax opportunities for any tax saving parent.

1. Accurate Social Security Numbers (SSN).

Having accurate Social Security Numbers (SSN) for all your dependents is crucial. In the past, it was possible to forego having an SSN for young children, but times have changed. Presently, if a dependent lacks an SSN or any other tax identification number, you are unable to claim deductions or other tax advantages on their behalf without any leeway.

Should you attempt to do so, you may face a penalty. It is important to verify that the SSN provided on your tax return is accurate and that the name listed exactly matches what is on your child or dependent’s Social Security card.

2. Utilize the Earned Income Tax Credit (EITC).

Make sure not to overlook the significance of the Earned Income Tax Credit (EITC). This tax benefit is highly advantageous, yet frequently goes unnoticed. Surprisingly, the eligibility criteria for this credit are more accessible than anticipated.

In the scenario where you are the tax saving parent of a single child and are submitting a joint tax return for the year 2022, you and your partner have the opportunity to earn a combined income of $49,622 and remain eligible for tax credits.

For families with three or more children, the maximum income allowed is $59,187. Conversely, for childless couples, the income threshold for claiming the EITC is set at $22,610. The amount of EITC benefits you receive is heavily influenced by the number of dependents you can claim, so be sure to consider each individual’s eligibility.

One frequently overlooked opportunity arises when individuals mistakenly believe that only the tax saving parent who asserts the dependency exemption is eligible to receive the Earned Income Tax Credit (EITC) for the qualifying child. In reality, the parent with whom the child resides is the sole individual eligible to claim the child for this tax credit. It is plausible for one parent to claim the child as a dependent, while the custodial parent claims the child for the EITC.

tax saving parent

3. Childcare Expenses Tax Credit.

In the event that you hire a caregiver for your child while you are employed or actively seeking employment, and your annual income falls below $15,000, you could be eligible for a tax credit of up to 35 percent on the initial $3,000 spent on childcare.

As income increases by $2,000, the percentage decreases by 1 until it reaches 20 percent for amounts equal to or exceeding $43,000.

To claim this tax benefit, it is essential to provide the Social Security number or tax identification number of the recipient of the payments made. It is advisable to avoid making clandestine payments to childcare providers for this reason.

When requesting receipts and essential information for claiming tax benefits, make sure to communicate clearly with the provider. In case they are unable to provide the necessary details, demonstrate the efforts you made in trying to obtain the required documentation.

This tax credit is accessible to you until your child turns 13 years old. In cases where your child or dependent requires assistance with self-care due to physical or mental limitations while you are working or seeking employment, you are still eligible for this credit regardless of the child’s age.

4. Employer Childcare Reimbursements

When it comes to financial benefits for child care, employer reimbursements can often outweigh the advantages of the Child and Dependent Care Credit. Utilizing a reimbursement account through your workplace allows for contributions of up to $5,000 annually, specifically designated for childcare expenses.

In light of its exclusion from both Social Security and income tax, contributing funds to this account proves particularly beneficial for individuals with moderate to higher earnings. This category of plan is sometimes identified as a dependent care benefit plan.

5. Consider Different Tax Filing Status

Tax saving parent can select the appropriate tax filing status that can significantly impact the amount you owe in taxes. For individuals who are unmarried and responsible for a child or dependent, they may qualify for the Head of Household filing status. It is possible to claim this status even if the child’s other parent is claiming the dependency exemption.

In most cases, selecting the head of household filing status can result in a reduced tax rate and increased standard deduction compared to filing as a single individual or choosing the married filing separately option. Furthermore, in the event of a spouse’s passing and meeting specific criteria with a dependent child, there is an option to file as a qualifying widow(er) with a dependent child for a period of two years after the spouse’s demise.

6. Education Expenses for Tax Credit.

Make sure to keep track of your educational spending from the previous year, such as textbooks and materials, in order to determine your eligibility for the American Opportunity Tax Credit. You could receive up to $2,500 to offset these expenses; tuition fees do not solely determine it.

When considering tax deductions, it is worth noting that expenses such as fees, books, supplies, and equipment can be claimed for yourself, your spouse, and any dependents.

Considered another well-liked educational tax benefit, the Lifetime Learning Credit offers the potential to reduce your taxes by up to $2,000. As your modified adjusted gross income increases, the maximum amount of this credit you are eligible for decreases.