Underreported Income: Why That IRS Letter Might Just Be About a Missing 1099

Ever open a letter from the IRS and feel your stomach drop? We get it. A lot of those notices boil down to something surprisingly simple: underreported income. It usually means the income you reported doesn’t match what someone else, like a client, your bank, or even PayPal or eBay, reported on your behalf. When that happens, the IRS sends a CP2000 notice. It’s not quite an audit, but it’s not a letter you want to toss in a drawer either.

Sometimes it’s just a missing 1099 from contract work or a side gig you did earlier in the year. Other times, it’s buried in a brokerage statement or tied to a retirement withdrawal you didn’t realize was taxable. Whatever triggered the mismatch, the IRS is asking for a response. Ignoring it only makes things worse. Left unanswered, their numbers become your new tax bill, with penalties and interest stacked on top.

If you’ve received one of these notices, don’t guess your way through it. You need a tax professional on your side. At Milestone Tax Solutions, we handle these cases every day. We’ll review your IRS transcripts, pinpoint what’s missing or misreported, and deal with the IRS directly so you don’t have to. If there’s a fix, we’ll find it. Call us now at 833.720.8080. Let’s get this sorted out.