A CP501 notice from the IRS is reminding you about any unpaid taxes or balances you might have. It's not the first time the IRS has reached out to you about this – it usually comes after you've already received a CP14 notice.
As a Reminder, here are some reasons why you received a CP14 notice that then led to you receiving a CP501:
- Mistake Made on Your Tax Return: Sometimes we make mistakes, it happens to the best of us. These mistakes can include math errors or forgetting to attach important information. If these mistakes mean you owe more taxes than you paid, that's when the CP14 notice might show up. If you do not respond to the CP14 notice, a CP501 will be sent to remind you.
- Missed the Tax Filing Deadline: Life gets busy—we get it. But if you forgot to file your taxes on time and owe the IRS money, they'll send you a CP14 notice to remind you to file and pay any unpaid taxes. If the taxes are left unpaid, a CP501 will be sent to remind you of your overdue balance.
- Changes from an Audit: If the IRS looks over your tax return and finds something doesn’t quite add up, like a mistake or something you missed, they might send you a CP14 notice to collect the extra taxes you owe because of it. If you do not respond to the CP14 notice, it will be followed up with a CP501 notice.
- Forgot Your Estimated Taxes: Some people, like freelancers or self-employed people, must pay estimated taxes throughout the year. If you didn't, you might get a CP14 notice for underpaying, which can then lead to a CP501 notice if the balance is left unpaid.
- Your Boss Made a Mistake: If your employer didn't take out enough taxes from your paycheck, you may owe more money, which could trigger a CP14 notice, which can then lead to receiving a CP501.
- You Fixed Something, But Still Owe: Maybe you sent in an amended tax return, but you still owe the IRS money after making the changes.
Next steps:
So, what should you do if you get one of these notices? Don't ignore it! Remember, this is the second time the IRS has reached out to you. Ensure you understand why the IRS says you owe money and how much they think you owe. If you agree, simply pay the requested amount. If you think there's a mistake, follow the instructions on the notice to dispute it.
Still need a little help?
Take our word for it: don't procrastinate! If you do, you might end up owing even more due to penalties and interest. If you're feeling unsure about what to do or if things seem too complicated, don't worry! You can always reach out to a local tax pro for some help. Or, if you prefer, you can chat with our team at Protection Plus to see if our on-demand option works for you. We'll walk you through everything you need to do and can even handle talking to the IRS if it's necessary. Check out our on-demand availability here: https://new.taxprotectionplus.com/contact-us