CP22A Notice: Changes to Your Tax Return Resulting in a Balance Due

What Does a CP22A Notice Mean?

Receiving mail from the IRS can be nerve-wracking, especially when it’s about your taxes. If you’ve gotten a CP22A notice, take a deep breath. It’s essentially the IRS’ way of saying, “Hey, we made some adjustments to your tax return, and now you owe us a little bit more money.” Let’s break down what this notice entails and how to handle it.

Why Did You Receive a CP22A Notice?

The IRS sends a CP22A notice when they’ve reviewed your tax return and found a discrepancy. This means something you reported doesn’t quite match their records or their interpretation of the tax law. Some common reasons include:

• Incorrect Calculations: Maybe you made a math error or used the wrong tax rate in your calculations, and the IRS has corrected it for you.
• Missing Income: Perhaps you forgot to include a source of income (like interest from a bank account, dividends from investments, or income from a side hustle) and now the IRS has it on their records.
• Disallowed Deductions or Credits: The IRS might have disallowed certain deductions or tax credits you claimed because they determined that you did not meet the requirements. For example, if you claimed a deduction that you were not eligible for, or claimed a tax credit you did not qualify for.
• Filing Status Errors: You might have chosen the wrong filing status (single, married filing jointly, head of household, etc.), which affects the tax rates and deductions you’re eligible for.
• Third-Party Reporting Discrepancies: Sometimes, the information that the IRS has received from your employer, bank, or other institutions doesn’t match what you have reported on your tax return. For example, if the IRS has a 1099 form that you did not include on your tax return.

The IRS is essentially saying, “Based on our information, this is what we think you owe.”

Understanding the CP22A Notice

The CP22A isn’t just a demand for money; it’s an explanation. The notice should clearly state:

• The Changes Made: The IRS should specify what they adjusted on your return. They usually reference the line number of your tax form that was affected.
• Why the Change Was Made: They should explain why they made the change. Was it a math error? A missing income source? A deduction they disallowed? Understanding why is important, so you can avoid making the same mistake again in the future.
• The Amount You Owe: The notice states the additional tax you owe, including any penalties and interest accrued. The total amount is what you are responsible for paying.
• How to Pay: The notice will explain how to make your payment. There are usually several options, including online, by phone, or by mail.
• Your Rights: The notice will inform you about your right to challenge or disagree with the changes by appealing them. The IRS provides instructions on how to do this, if needed.

Don’t Ignore It
Throwing the notice in a drawer and hoping it goes away will only make things worse. Penalties and interest will continue to accrue until the balance due is paid.

What Should You Do When You Receive a CP22A Notice?

1. Read it Carefully: Don’t skim! Read every word, especially the sections detailing the changes, the reason for the changes, and the due date for payment.
2. Review Your Tax Return: Go back to the tax return you originally filed. Compare it line by line with the CP22A notice to see the exact changes the IRS made.
3. Gather Your Documentation: Collect all the relevant documents you used to file your return. This could include W-2s, 1099s, receipts for deductions, bank statements, and so on. Having all of these together will help you better understand the changes made and also help if you wish to dispute them.
4. Verify the Changes: Check the accuracy of the changes. Did the IRS correct a genuine error? Or do you believe there is a discrepancy in their findings?
5. Pay the Balance Due (If Applicable): If you agree with the IRS assessment, pay the additional tax, penalties, and interest by the due date specified in the notice. This will stop further penalties and interest from accumulating.
6. If You Disagree: If you don’t agree with the changes, you have the right to dispute them. Follow the instructions provided in the CP22A notice for filing an appeal or requesting an audit reconsideration. Be prepared to provide documentation to support your claims.
7. Seek Help If Needed: If you are confused or overwhelmed by the process, consider getting help from a tax professional. A CPA or Enrolled Agent can provide valuable insights, and help you navigate the complex tax code, and ensure the proper resolution to your issue with the IRS.
8. Keep Good Records: Always retain copies of your tax returns and any notices you receive from the IRS. This will help you in the future.

Common Mistakes and How to Avoid Them

• Ignoring the Notice: As mentioned earlier, the worst thing you can do is ignore the notice. Timely responses will help avoid additional penalties and interest.
• Assuming the IRS is Always Correct: While the IRS is usually right, they can sometimes make mistakes, too! That is why it is always best to verify any changes they have made on your tax return.
• Not Keeping Good Records: Being organized with your financial documents can help ensure accuracy when filing your tax return, and help support you if you ever receive an IRS notice.
• Not Addressing the Issue: If you disagree with the changes, ignoring the matter will not make it go away. Disputing the notice is your right, and you should do so if you believe that the IRS made an error.
• Not Seeking Professional Help: Tax laws can be complex. If you need help, reach out to a tax professional. They are there to assist you.

Related Tax Concepts

• Tax Return: This is the form you file with the IRS (or your state) to report your income, deductions, and calculate your taxes.
• Tax Liability: This is the total amount of tax you owe. A CP22A means your original liability was calculated incorrectly.
• Penalties and Interest: The IRS charges penalties and interest for underpaid taxes, failing to file on time, and other tax infractions.
• Tax Audit: An official IRS examination of your tax records to verify accuracy.
• Tax Resolution: If you owe the IRS and can’t pay, there are ways to settle your debt and get on a payment plan to resolve your tax issues.

Tips for Avoiding a CP22A Notice

• Double-check Your Math: Simple math errors are a frequent cause of these notices. Take your time and verify your calculations.
• Report All Income: Ensure you include every source of income you received, including part time jobs, side hustles, and investment income.
• Keep Detailed Records: Maintaining thorough documentation of all income, deductions, and credits will ensure accurate filing and provide support if your return is questioned.
• File Accurately: It is important to make sure you are filing your return using the proper filing status, and using the tax rates that apply to your situation.
• File on Time: Filing your return on time will avoid additional penalties. Even if you need more time, you can file an extension.
• Consider Professional Help: If your tax situation is complex, consult with a tax professional for guidance. They can help ensure you’re complying with the tax laws, claiming all the deductions and credits you’re entitled to, and avoiding potential issues with the IRS.
• Use Tax Software: Tax preparation software can help minimize the chances of errors.

Receiving a CP22A notice might seem daunting, but by understanding the reasons behind it and taking prompt action, you can resolve the issue and stay on top of your tax obligations. Remember, the IRS wants to ensure compliance, and these notices are a part of that process.