What Does a CP28 Notice Mean?
Okay, so you got a letter from the IRS with “CP28 Notice” printed at the top. Don’t worry, this isn’t an audit! It usually means the IRS has made some sort of correction or adjustment to your tax return. Think of it like a gentle notification letting you know about a change.
Background on IRS Notices
The IRS sends out many different types of notices for various reasons. These notices are their way of communicating with taxpayers. They are often triggered by discrepancies or issues found when the IRS processes tax returns. The CP28 is a common one, relating specifically to certain kinds of adjustments made to your account.
It’s important to understand why you received a notice, instead of ignoring it. Ignoring a CP28 notice could potentially lead to more serious issues down the line, like penalties or even an audit. So taking the time to understand it can save you a lot of trouble in the long run.
Why Did You Receive a CP28 Notice?
The IRS sends a CP28 notice when they’ve identified an issue or discrepancy on your tax return, and have made a change as a result. There are various reasons this could happen. Let’s break down a few common scenarios:
- Mathematical or Clerical Errors: This is the most common reason for a CP28 Notice. The IRS uses computers to process millions of returns. If they find a simple math error (like incorrectly adding up your deductions) or a clerical mistake (like writing a number in the wrong field) they will correct it and send you a CP28 notice.
- Unreported Income: If the IRS discovers that you forgot to report income from a source (like self-employment earnings or interest income), they’ll adjust your income and tax liability. They will base this on information they get from third parties like your bank or employers.
- Incorrect Claim of Deductions or Credits: If you claimed a deduction or credit you weren’t fully eligible for (like an incorrect number of dependents), the IRS might change it and send you this notice. They also may reject a deduction if you don’t have the proper supporting documentation.
- Changes based on 3rd Party Information: Sometimes, the information reported on your tax return does not match up with information they receive from third-party sources, such as your bank or employer.
Basically, anytime the IRS changes something on your tax return, you will likely get a notice, and a CP28 is a common one they send out.
How to Understand Your CP28 Notice
The CP28 notice isn’t always the easiest thing to read (tax language can be tricky!), but there are key sections to focus on:
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The Top of the Notice: This will have the CP28 identifier, your name and address, and your social security number (or EIN if it’s for your business). It will also have the date the notice was issued and the tax year it’s related to. Always double check that the name and information on the notice is correct, since this could signal identity theft.
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Explanation of Changes: This is the most crucial part. The IRS will detail exactly what they changed and why. They will tell you what information they changed, and what the correct numbers should be. Make sure you read this closely. This section should tell you which line items were adjusted and the supporting explanation.
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Impact on Your Tax Liability: The notice will clearly show how these changes affect your overall tax balance. It will tell you if you owe additional tax, or if you are due a refund or a reduction in taxes owed. This will have the before-adjustment numbers and the after-adjustment number.
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Payment Instructions (if applicable): If you owe the IRS money, the notice will include information on how to make the payment. It will list all options like by mail, online or by phone. It also lists the deadline for when the payment is due. It’s important to adhere to the due date. Failure to do so can result in further interest and penalties.
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Contact Information: The notice provides contact details for the IRS, like phone numbers and mailing address. They will also list which specific department handled the change and which reference numbers you will need to provide if you need to contact them.
What Should You Do After Receiving a CP28 Notice?
Once you understand why you received the CP28, here are the next steps to take:
- Verify the Changes: Compare what the IRS changed to your original tax return. Make sure you understand why they made the changes. Have all of your documentation handy, such as receipts, tax forms, and worksheets, so you can double check that what you originally filed was correct.
- Check for Errors: While the IRS is usually correct, sometimes they make mistakes. It’s possible the CP28 notice has an error. Double check the numbers they have adjusted to make sure it matches with your records.
- If you agree with the changes: If you believe the IRS is correct, make sure to pay any taxes you owe by the deadline to avoid further interest or penalties. Do not ignore the due date as it can cause further issues with the IRS.
- If you disagree with the changes: If you think the IRS is wrong, you have the right to challenge their adjustment. You will need to gather any evidence to support your case and send this to the IRS. You might need to respond by the deadline listed on the notice. It’s best to consult with a tax professional if you disagree with the notice, as the steps you must take to challenge the change can be complicated.
- Keep good records: Always keep all tax documents and correspondence with the IRS. It will help with future tax filings and will allow you to reference any previous issues that occurred.
Common Mistakes and Misconceptions
Here are some things to keep in mind about CP28 notices:
- Don’t Panic: Receiving an IRS notice isn’t always bad news. Often it’s just the IRS clarifying or fixing minor errors.
- Don’t Ignore it: Ignoring the notice won’t make it go away. It could lead to more serious consequences, like penalties and interest, if you don’t take action.
- It’s Not an Audit: A CP28 notice is not an audit. It’s just letting you know they’ve made an adjustment to your tax account. An audit is a more in-depth examination of your taxes.
- You Can Dispute: You can disagree with the changes the IRS has made, but you must have supporting documentation to back up your claim.
Related IRS Notices
Other IRS notices that are often related to or similar to a CP28 include:
- CP11 Notice: This notice is sent when the IRS has made a change to your tax return resulting in a balance due. It’s similar to the CP28, but more focused on money owed.
- CP12 Notice: This notice is sent when the IRS has made a change to your tax return resulting in a refund.
- CP14 Notice: This is a notice from the IRS that reminds you that you have an unpaid balance with them.
- Notice of Deficiency: This notice is sent when the IRS has made major changes and has determined you have a tax deficiency. This is more serious and requires a careful and quick response.
Getting Help With Your CP28 Notice
If you find your CP28 notice confusing or overwhelming, don’t hesitate to seek assistance from a qualified professional. Here are some options:
- Tax Professionals: A tax accountant, enrolled agent, or tax attorney can help you understand your notice and determine what actions to take. They can also represent you with the IRS if needed.
- IRS Taxpayer Assistance Centers: The IRS has Taxpayer Assistance Centers where you can get in-person help with your taxes.
- IRS Website: The IRS website has a lot of resources to help taxpayers, including information about different notices.
Final Thoughts
Getting a CP28 notice from the IRS can be a bit unsettling. But by understanding what it is, why you received it, and what steps to take, you can address it effectively. Remember to stay organized with all your tax documents, and never hesitate to ask for help when you need it. Being informed and proactive can make dealing with taxes much less stressful.