CP51A IRS Notice

The IRS Notice CP51A means that the IRS computed the tax on your IRS Form 1040, 1040-A or 1040-EZ and they concluded that you owe taxes.

Steps to Take After You Receive a CP51A Notice?

  • The first thing to do is to read the notice carefully. The notice will explain how much you owe and how to make payments to the IRS. The notice is quite easy to understand.
  • If you agree with the amount that was computed by the IRS, you will need to pay the amount by the due date indicated in the notice sent to you.
  • If you disagree with the amount of tax that was computed by the IRS, you can contact them using the phone number provided on the notice CP51A. The number is usually at the top right corner of the notice. You can tell your tax representative to talk to the IRS on your behalf. Tax experts usually have more experience in dealing with issues like this. After you contact the IRS saying you disagree with the amount they computed, they will request more information from you such as cancelled checks, amended return and others so make sure you have all your documents ready when you call.
  • If you can’t pay the full amount you owe, you will have to make payment arrangements with the IRS. This is usually an installment agreement that allows you to make monthly payments until your debt is covered in full. The agreement you get depends on your financial situation at that time.

You can also qualify for the “offer in compromise” program which enables you to settle your tax debt for less than the full amount owed. The IRS doesn’t just give it away, you have to be eligible. The program isn’t for everyone. For you to qualify for the OIC program you must have filed all required tax returns and you must have made any required estimated payments. If you don’t do so, your OIC application will be rejected along with your application fee.

There will be no interest charged on the money you owe if you pay the full amount you owe by the date on the payment coupon. However, interest will be charged if you pay after that date, even if you get a payment plan from the IRS. You will also receive a late payment penalty if you can’t pay the full amount you owe. However, if you contact the IRS telling them about your financial situation, they may be able to remove the penalty.

As we know, the amount you see on the notice is as a result of the tax computed on Form 1040, Form 1040X and Form 1040EZ. We would discuss about the three forms below.

FORM 1040 – U.S. INDIVIDUAL TAX RETURN

Form 1040 is the standard Internal Revenue Service (IRS) form that individual taxpayers use to file their annual income tax returns. The form contains sections that require taxpayers to show their taxable income for a specific year to determine whether additional taxes are owed or whether the filer will receive a tax refund from the IRS. Personal information, such as name, address, Social Security number, and the number of dependents are asked for on IRS Form 1040.A filer also needs to report wages, salary, taxable interest, capital gains, pensions, Social Security benefits, and other types of income. Taxpayers may need to file supplemental tax 1040 forms depending on their situation.

Form 1040 needs to be filed with the IRS by April 15thin most years. The date for year 2020 was moved to July 15th. Everyone who earns income over a certain threshold must file an income tax return with the IRS (businesses have different forms to report their profits). This is the most standard version of the 1040 series. All other forms fall under it, such as 1040-EZ, 1040NR-EZ, 1040-X, 1040-NR, 1040-ES, 1040-V and 1040-SR.

FORM 1040-X: AMENDED U.S. INDIVIDUAL INCOME TAX RETURN

Form 1040-X is issued by the Internal Revenue Service (IRS) to taxpayers who need to amend their tax returns for any reason whatsoever. A 1040-X form is necessary for an amended tax return that will change tax calculations, such as changes to filing status, number of dependents, or corrections to income credits or deductions. However, it’s important to avoid using Form 1040-X for mathematical errors in your tax return, as the IRS will correct any in your return. The form must be filed within three years after the original return was filed or within two years after the tax was paid, whichever is later. Anyone who files a 1040-X form may also need to amend their state tax return.

The 1040-X form can be filed by anyone who has already filed a tax return and would like to correct Forms 1040, 1040-NR, 1040NR-EZ or 1040EZ (when it was still in use). If you also wish to change any amount adjusted by the IRS, you can file the form. Lastly, you can file this form if you wish to make a claim for a carry back due to a loss or unused credit.

FORM 1040EZ

IRS Form 1040EZ – Income Tax Return for Single and Joint Filers with No Dependents was the shortened version of the Internal Revenue Service (IRS) Form 1040. This form was for taxpayers with basic tax situations and offered a fast and easy way to file income taxes. Note that this IRS Form is no longer in use.

To use the form, a taxpayer had to have taxable income of less than $100,000, less than $1,500 of interest income, and claim no dependents. Other requirements for filing the Form 1040EZ included:

  • The taxpayer and his or her spouse, if married filing jointly, had to be under age 65 at the end of the relevant filing period.
  • He or she could not be blind as of the end of the relevant filing period.
  • The filer could take no deductions for student loan interest, educator expenses, tuition and fees, and or itemized deductions.
  • If the filer received interest income, he or she could not have been required to file Schedule B, didn’t have amounts in boxes 11, 12, or 13 of Form 1099-INT or boxes 6 and 10 of Form 1099-OID, and didn’t earn any interest as a nominee.
  • Tax credits for retirement savings, health coverage, and education were not allowed.
  • The tax filer could not have received any advance earned income credit (EIC), although he or she would have been allowed to claim the EIC when filing Form 1040EZ.
  • The filer, his or her spouse, if married filing jointly, or any of his or her dependents for which he or she claimed the personal exemption didn’t receive any advance payments of the premium tax credit offered for health coverage plans sold on the Marketplace.

The filer doesn’t owe any household employee taxes on wages paid to household employees.