When dealing with tax debt or attempting to resolve an IRS issue, documentation can be just as important as understanding the available resolution options.
Tax resolution often requires a clear picture of your income, expenses, assets, tax filings, and payment history.
Good records can help establish that picture.
Why Documentation Matters
Depending on the type of tax matter, the IRS may need information to evaluate your financial circumstances or verify information being presented.
Incomplete or inaccurate documentation can cause delays and make it more difficult to evaluate potential options.
Keeping organized records can help you:
- Understand what you owe
- Verify previous payments
- Review income and expenses
- Identify missing tax returns
- Respond to IRS requests
- Prepare financial disclosures
- Support information reported to the IRS
Important Documents to Gather
The documents required will depend on your individual situation, but useful records may include:
IRS Correspondence
Keep copies of notices, letters, payment demands, and other correspondence received from the IRS.
Pay particular attention to dates and response deadlines.
Tax Returns
Maintain copies of previously filed federal and state tax returns.
If returns are missing, identifying the unfiled years may be an important part of addressing the overall tax situation.
Income Information
Depending on your circumstances, this may include:
- Pay stubs
- W-2 forms
- 1099 forms
- Business income records
- Bank statements
- Other income documentation
Monthly Expenses
Financial evaluations may require information about regular household or business expenses.
Examples can include:
- Housing
- Utilities
- Transportation
- Insurance
- Medical expenses
- Childcare
- Secured debt payments
- Other necessary living expenses
Assets
Depending on the resolution option being considered, information about assets may also be relevant.
This can include:
- Bank accounts
- Real estate
- Vehicles
- Investments
- Retirement accounts
- Business assets
- Other property
Documentation and Offers in Compromise
Financial documentation is particularly important when an Offer in Compromise is being considered.
The IRS evaluates factors including income, expenses, assets, and ability to pay when determining whether an offer may be appropriate.
Providing inaccurate information can create serious problems, so financial disclosures should be complete and truthful.
Business Recordkeeping Matters Too
For business owners, maintaining accurate records can help support income and expenses reported on tax returns.
Records may include invoices, receipts, bank statements, payroll information, purchase records, and other supporting documentation.
Create a Simple Organization System
You do not necessarily need a complicated system.
Consider organizing documents into categories such as:
IRS Notices
Tax Returns
Income
Bank Statements
Expenses
Assets
Payments
Business Records
Digital copies can also provide useful backups for important documents.
Preparation Can Make the Process Easier
Tax problems can become more difficult when records are scattered or incomplete.
Organizing your information before evaluating resolution options can provide a clearer picture of your situation and help identify what may still be missing.
Need Help Reviewing Your Tax Situation?
INNOVATIVETAXGUIDANCE LLC can help you review your situation and understand the information that may be relevant when exploring potential tax resolution options.
Request a Free Consultation
INNOVATIVETAXGUIDANCE LLC is a private company and is not affiliated with the IRS or any government agency. This content is for general informational purposes and does not constitute legal, tax, or financial advice.
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