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If you’ve received a CP10 Notice, the IRS believes you made a mistake on your income tax return and owe more tax than you claimed. The refund you asked to apply towards next year’s estimated taxes is now lower.

Why does the IRS send CP10 Notices?

The IRS sends CP10 Notices for miscalculations. You may have missed a step when completing your tax return, checked the wrong box, or entered something in the wrong line.

What’s the difference between a CP11 Notice and Notice CP10?

Both of these tax notices mean that the IRS believes you made an error and understated your tax. With a CP11, you’re being asked to make an additional payment.

With a CP10, the money was taken from money you originally asked to apply towards estimated taxes. You don’t need to make an additional payment for this year but may need to make an additional estimated tax payment for next year.

How can you verify a CP10 Notice?

Your CP10 will be about something you included on your tax return. If it’s talking about deductions or credits you never heard about, it may be a scam. The one exception might be if it says you missed something, but that item should apply to your tax situation.

Your notice will look like this example on the IRS website. You can also go to irs.gov and look up the phone number to call. Never call the phone number on a notice you aren’t sure about, because if it’s a fake, the number will go to the scammers.

What if I’m not sure if the IRS is right or I disagree?

The IRS may not always be right. In addition, just because you made an error doesn’t mean you truly owe that tax. The IRS may agree that you don’t owe money after you fix the error and/or supply additional documentation.

You can either follow the instructions on the CP10 Notice to respond, or you can hire an Enrolled Agent or other tax professional to help you. Some CP10s require very simple fixes, while others are more complicated, so whether you need help depends on how well you understand what the IRS changed and your comfort level in dealing with the IRS.

What do I need to do next?

When you made your claim for refund, you told the IRS to apply it to your estimated tax payment. Unless you convinced the IRS not to keep your tax refund, you’ll need to make an additional estimated tax payment. If you don’t, you could get hit with the estimated tax penalty for not paying enough in estimated taxes.

Conclusion

If you receive a CP10 notice, be sure to respond by the notice deadline if you disagree with it. If you’re not sure how to respond, you can contact a tax professional for assistance. Remember that you may also need to pay additional estimated taxes to cover the amount you wanted to pay with your refund before the IRS took it.

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