The IRS says I didn't report income that I reported 👀 😲😭💔

[progree]

Last edited Tue Nov 16, 2021, 09:02 AM - Edit history (2)

I'm slightly altering numbers for privacy and also using very round numbers ...

I also did my taxes that year using Turbo Tax (might be a factor)

Yesterday I got a CP2000 notice from the IRS claiming that I didn't report $10,000 in Beneficiary IRA RMD distributions for 2018 taxes, thus under-reporting my taxable income by $10,000. So I owe $2,900 in taxes due to that and some secondary effects that I won't bother to go into and including $190 in penalty interest.

Anyway they clearly enumerate the IRA RMD amounts from the 1099-R from Fidelity that they claim I didn't report.

Then they say my "Retirement income taxable" that I reported is $16,000 (true) but the correct figure, the IRS says, is $26,000, for a difference of $10,000.

I don't know why they didn't specify which line on my tax return had the problem, but "Retirement income taxable" fits 1040 Line 4b which has $16,000 on it. Line 4b is "IRAs, pensions, and annuities, taxable amount". So it all matches.

WELL, DAMMIT, EXCEPT THAT the $16,000 on my Line 4b INCLUDES the $10,000 in the Beneficiary IRA RMD distributions, as well as $6,000 in taxable annuity income. It's very specifically shown in some of the "Keep For Your Records" pages of the full tax return PDF file that TurboTax generated.

Now as what Turbo Tax sends to the IRS, who knows, but I'm pretty sure it's a lean version that doesn't show these "Keep For Your Records" pages.

Anyway, my question is, has anyone gotten a goofy IRS notice that some income or some other item was not reported, when it was?

And when one points out THEIR error, do they concede, or do they go full Trump?

I will be responding just by explaining that the $16,000 on 1040 Line 4b includes the $10,000 in Beneficiary IRA RMD distributions that they say I didn't report, plus the $6,000 in annuity income, and I will also send them the "Keep For Your Records" pages that enumerate both of these. (They want my response in writing, they don't say anything about responding by phone and saying "hey guys...", so I'll give it in writing).

I'll say if this isn't satisfactory, can you please enumerate why you think $26,000 is the right number for Line 4b? (Who knows, maybe Fidelity sent the 1099-R to the IRS twice).

I've read many reports that they are severely understaffed (Republicans want the IRS understaffed so they can cheat on their taxes, and so that their "hard-earned" money doesn't go to supporting "those people", i.e. the "multicultural types" ), but I haven't noticed this kind of carelessness from the IRS before.

I'll put it on my calendar to let you all know how it turns out, I suspect it'll be a month at least before I hear anything back.

Edited Feb. 5 to add: Got a snail mail response from them, received Feb 5, in essence, "Before we resolve this matter, we need to process all of your information. We'll send you our complete response within 90 days". See #17 below for more details.

Edited May 8 to add: Got a snail mail response from them, received Feb 5, in essence, "Before we resolve this matter, we need to process all of your information. We'll send you our complete response within 90 days".

Edited Nov 16 to add Got another response - IRS 8/2/21 letter received 8/3/21 - same as above

Got a letter 8/26/21 - "we're pleased to tell you that the information you provided resolved the tax issue in question and that our inquiry is now closed".

9 months is a long time to have a $2,900 tax bill plus ever-growing penalty hanging over one's head.