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After Crossing the Finish Line

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After Crossing the Finish Line

Photograph Credit: Microsoft Images

Like a runner who trains for the big race and puts all her efforts into finishing strong, we have been preparing our important documents file for a completed system. After crossing the finish line, we celebrate and maintain just like the runner who continues to run after the race.

Maintenance on your important document system will depend on how often you deal with these items. I usually have one or more documents to add or change within our system each month. Some additions and changes include:

Besides the monthly maintenance, I try to go through our entire important document file once a year where I check each set of documents for accuracy and make sure all our information is up-to-date.

On my next big maintenance check, I need to update the address of a beneficiary. He recently moved, and I will need to make sure all the accounts where he is named have the correct address to prevent any discrepancies or delays in payment or distribution.

This process is on-going. But once the system is in place, the maintenance phase is quite simple compared to the setup and preparation phase. Just like the runner who is already in shape, the maintenance process is easier than the original training.

You ran a great race, crossed the finish line, and entered into the maintenance phase. Having just setup your file, you can take a break until you need to add or change a document within your file.

Going through your entire system may not need to occur until next year. For now, enjoy your accomplishment as you endured through a large organization process. Congratulations!

Question: How does it feel to just maintain?  

Time to Celebrate!

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Time to Celebrate!You did it, and it’s time to celebrate!

This process was grueling, intensive, and lengthy. In using time wisely, you have completed a HUGE project in organizing your important documents.

Your investment of time and energy will continue to pay off in the years to come as you quickly access your information and know where those documents are located.

I’m so proud of you for plugging along, taking it one step at a time, and working through this process. Whether you used the accordion filing system or created a system of your own, I hope you feel a sense of accomplishment.

What a joy to tackle those piles of paperwork that we started working on over 2 years ago. You’ve done a great job resulting in an organized filing system.

Congratulations on a job well done!

Time to Celebrate!Request:When you complete the organization of your important documents, please leave a comment to let us celebrate with you and to encourage those still working. Thank you! 

Tax Records: How to Dispute an IRS Notice – Part 2 of 2

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Tax Records: How to Dispute an IRS Notice – Part 2 of 2

Photograph Credit: Microsoft Images

In 1789 Benjamin Franklin wrote a letter to Jean-Baptiste Leroy stating, “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.”

Having seen so much death in fighting the English for the freedoms established in the Constitution and the amount of money needed to fund those battles and wars, Benjamin Franklin spoke honestly and truthfully. Those truths still hold true today.

Though the IRS is trying to get every penny they can to pay the debts they have incurred, they do make mistakes. In Part 1 of How to Dispute an IRS Notice, I explained how we received our notice and the 7 steps taken to prepare the presentation of our case.

In Part 2, I will share how I contacted the IRS and the results of that communication including what I would have done had the issue not been resolved to my satisfaction.

Part 2: Presenting your Case

Yes, I was a bit nervous prior to making contact, but saving my family $1500 was all the motivation I needed to get the ball rolling.

1. Choose a Contact Method

The notice I received indicated assistance via the Internet or phone. I chose to call and used the phone number in the contact section rather than the phone numbers listed in the additional information sections.

2. Select a Quiet Time

Needing time without interruption, I waited until nap time to make the call.

3. Review your Case

Prior to calling, I went through my documents and read through my proof to be sure I had everything needed.

4. Make Contact

I made the call and was transferred to a representative. After identifying myself, I asked to discuss the notice received. Then I let the representative explain the notice.

5. Listen

For me, I did not need to present my case immediately. I allowed the representative to explain the issue which did two things:

      • Allowed the representative to get familiar with my situation, and
      • Confirmed the problem issue

In our instance, the problem was the paperwork. The IRS claimed they did not receive the forms showing the deferred tax from our Traditional IRA to a Roth IRA conversion.

6. Offer your Proof

When the representative finished explaining, she began asking questions. At that time, I calmly read to her my proof in that I had a confirmation that all the pages of our tax return were filed electronically. I had a copy of the forms and the date the transmission occurred.

7. Wait for a Response

After noting the proof, I stopped. The representative then accessed our return and “found” the correct forms. She then confirmed that those forms were correct which resolved the tax issue in question and that our inquiry was now closed.

8. Request a Written Response

To confirm that information, I requested a resolution in writing which the representative sent. I took the response and added it to the tax notice and other documentation used to solve the issue. These documents were stapled together and added to our tax records file opening.

Additional Option

In our situation, I chose to address the issue directly with the IRS. The process was quick and easy which saved our family money, energy, and time. However, had the issue not been quickly resolved or if I had felt uncertain about the situation, I would have contacted TaxAct.

When we filed our taxes electronically through TaxAct, we gained FREE tax help and audit support. Any notification from the IRS regarding our filed tax return during the year or years we file with TaxAct, we get FREE help and support.

I could have contacted TaxAct and asked them to help me with the IRS process. If they had advised me to call the IRS, I would have requested a conference call with TaxAct, the IRS, and myself.

Using an electronic filing service has its advantages which I will not hesitate to use should we need them. Also, if you have someone prepare your taxes, you should be able to take any IRS notices to your accountant to handle the issues. Be aware as you might incur an additional fee for their services.

Though the day we received an IRS notice was not our lucky day, we addressed the issue quickly and completely. I was not impressed with the representative as she could not say why we received the bill when the documents were in our file. Of course, it does not hurt the IRS to send out a letter.

If the citizen does not want to press it, then they just pay even though they do not owe it. In this way, the government gets more money. However, citizens can prove their case and keep those hard-earned dollars in their savings.

Having been through this process resulting in a win for us, I will not panic the next time I get an IRS notice. I will address it quickly as penalties will accrue if the deadline is not met.

With the certainty of death and taxes, try to relax should you receive an IRS notice. It is not the end of the world. Consider your options, make your case, and let the IRS resolve your dispute. Keep your emotions in check while you work it out.

This process would not fall into the category of fun, but it was positive and resulted in a huge sigh of relief. I was thrilled to have this matter solved within 24 hours of receiving the notice.

Stay on top of these items as they will weigh you down. Keep on plugging along in your document organization. We are at the end of our important documents file box 3, so it is time to do some celebrating. Hip Hip Hooray!

Question: Have you disputed an IRS notice?

Tax Records: How to Dispute an IRS Notice – Part 1 of 2

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Tax Records: How to Dispute an IRS Notice – Part 1 of 2

Photograph Credit: Microsoft Images

When I think of taxes and the IRS, I get a bit nervous. I get a knot in my stomach every year before clicking that submit button when electronic filing our tax returns. So, when we received an IRS notice in March of 2012 indicating a $1500 error, I immediately felt sick.

Thoughts that went through my mind were how could I have missed such a huge amount, payment would need to come from our emergency fund, and why did it take over a year to notice the error.

In retrospect, I should have just relaxed and gone to my documentation. Please learn from my experience by accepting the notice and dealing with it in an organized manner.

The evening I received the notice, I waited until the kids were in bed to concentrate on understanding and working through the information. Dealing with the issue quickly helped put my mind at ease and clear the air well before the deadline. I share how to dispute an IRS notice to calm you should you also receive a notice.

Part 1: Preparing your Case

These are tips that I found helped me – as dealing with the IRS is one of the top items on my I’D RATHER BE DOING ANYTHING OTHER THAN THIS list. 🙂

1. Gather your Tax Documents

Keeping our tax returns in our important documents file, I went to the 11th file opening and retrieved our 2010 federal tax return.

2. Choose a Quiet, Non-interrupted Space

Waiting until my children went to bed gave me a chunk of time at my desk without interruption in which to work.

3. Take a Deep Breath

Giving myself a moment to collect myself, clear my head, and focus on the task at hand, I took a series of deep breaths before looking at the notice.

4. Read the Notice in Full

Our notice was 12 pages in length. Of course, some of it was in legal terms, but I worked my way through the information.

5. Identify the Line Item Issue

For us, the notice issue was when we converted our Traditional IRA to a Roth IRA. We took advantage of the tax code loop hole and chose to defer paying taxes on the total amount until 2011 and 2012. Since Paul and I both converted, the IRS was asking for the total tax from both our accounts in 2010.

6. Prove your Choice

I went back to our tax return to find our nondeductible IRA forms and confirmed that these were filed electronically with our tax return.

7. Organize your Proof

With the documentation collected and realizing that we had filed correctly, I put all the paperwork in the order I needed to contact the IRS.

As I prepared my case, I became more confident realizing that the IRS made a mistake. I relaxed knowing that our family would not need to pay the $1500 amount indicated as half of the tax was claimed on our previously filed 2011 tax return and the other half would be claimed on our 2012 return.

Dealing with the IRS is not a walk in the park but by keeping our documents and confirmations of actions taken, I had proof to prepare my case. The second part of this short series will share how I addressed the notice with the IRS.

If you receive a notice from the IRS, then gather your tax documents, choose a quiet, non-interrupted space, take a deep breath, read the notice in full, identify the line item issue, prove your case, and organize your proof. With your case prepared, you will have a better understanding of your situation when dealing with the IRS. Happy preparing!

Question: Have you ever received an IRS notice?

Tax Records: 2010 Tax Documents

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Tax RecordsAs I pull out the last few items within our important documents filing system, I am amazed at how far our family has come. As I see the 2010 tax documents, I am reminded of life at home with little ones.

I had a new nursing baby (Miss 3), spent weeks reading books and singing songs while potty training (Miss 6), and prepared our family for the kindergarten change (Mr. 8). This was also a time where I typically stayed in my pajamas all day as life was just that busy.

Blogging had intrigued me in mid-2010, and I began researching and reading before diving into this journey. So, looking back over these 2010 tax documents brings back good memories and gratitude for the progress made within my family.

In winding down this tax category, the last bundle within the 11th file opening of File Box 3 consists of our 2010 tax documents. When I file our 2013 document, these 2010 documents will move to our totes as I only keep the last 3 years of tax records within our important documents file.

2010 Tax Documents

Comprised of our federal, state, and the setup information and first electronic filing documents, our 2010 tax bundle is housed behind the 2012 and 2011 bundles:

Federal Tax Documents

    • Copy of tax refund check
    • Federal Income Tax Return with Schedules and Worksheet

State Tax Documents

    • Copy of tax refund check
    • State Income Tax Return

Electronic Filing Documents

    • TaxAct User Agreement
    • TaxAct Declaration
    • TaxAct Filing Instructions for Federal and State
    • TaxAct Status Report
    • TaxAct Confirmations

Each of these sections is either stapled or paper clipped together and then one large paper clip combines all three sections into one bundle. This bundle is the third of three years kept within this file opening of our tax records category.

Keeping these records close by came in handy when the IRS in 2012 challenged an entry on our 2010 return. Though our situation was not an audit, I still had to verify our records before handling the situation with the IRS. I will share my experience with handling this situation in the next and last post for the tax record category.

As you continue filing and organizing your important documents, start where you are. You know that pile on the floor behind your desk that you will get to one of these days. Start with that one.

Setup your file and then start adding paperwork. As you find the paperwork a home, you can then start to organize each section. The important step is to start. Happy organizing!

Question: How was your pace of life 3 years ago?