Originally Posted by
Martinjmpr
I know exactly what the IRS does when they think you owe back taxes because last year I opened up the mail in early June and saw a letter from the IRS stating that we had failed to declare income on our 2013 taxes and owed $14,000 in back taxes and penalties. [panic]
Turns out when my wife rolled over one of her IRAs the receiving institution never notified the IRS that the account was rolled over into another deferred account so it was counted as both an early distribution and unreported income and since it was undeclared they also socked us with a $3000 penalty. [Mad]
The good news is that my wife is like the most organized person on the planet. She went right to the file cabinet, pulled out ALL of the supporting documentation, I made copies, drafted a nice little legal brief and we fired it off to the IRS. 2 months later we got a letter back from them saying the matter was resolved and nothing was due. Lesson learned: Keep records of anything related to 401k, IRA, or anything else that could be reported as income. ;)