12c IRS Letter - What does this 12c letter mean and what should I do?

That 12c letter is basically the IRS saying they need more information about income you reported. The "12c" is just the letter code that tells you what kind of request it is. What's happening is the IRS sees an amount on line 8 of your 1040 (which is "Other Income"), but they don't see the supporting Schedule 1 that explains where that income came from. When you report "Other Income" on your tax return, you need to provide details about what kind of income it is using Schedule 1. Your CPA likely made an error by either not including Schedule 1 or not completing it properly. It's not necessarily a huge deal, but you need to respond. Contact your CPA immediately since they prepared the return - they should fix this for you at no additional cost. They'll need to complete Schedule 1 properly and send it back to the IRS with a copy of the letter.

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To clarify about the 12c letter - it's specifically asking about line 8 on your 1040, which is "Other Income." This could be gambling winnings, jury duty pay, prizes/awards, or other miscellaneous income. The IRS is saying you reported an amount there but didn't include the required Schedule 1 to explain what type of income it is. It sounds like your CPA made a simple error by not including this schedule. The much higher bill might be because: 1. The IRS doesn't know what kind of income this is, so they can't apply the right tax treatment 2. You might be missing deductions that would offset this income 3. There could be penalties and interest added for the late filing Call your CPA immediately - fixing this is their responsibility since they prepared the return!

Don't panic! I've gotten a 12c letter before and it's not that scary once you understand it. The letter is just asking for an explanation of that "other income" amount. Quick question though - did your CPA give you a copy of the return they filed? You should be able to see if Schedule 1 was included. If you have it, just send a copy of that schedule with a letter referencing your 12c notice. If not, ask your CPA for it.

I went through something very similar with a 12c letter last year! The key thing to remember is that this is usually a simple fix, not a major problem. The IRS just needs clarification on that $1,250 "other income" amount. Here's what I'd recommend doing immediately: 1. Contact your CPA right away - they should handle this correction at no extra charge since it was their oversight 2. Ask for copies of ALL the returns they filed for you so you can see what was actually submitted 3. The 30-day response deadline is firm, so don't wait Regarding the higher-than-expected tax bill, this could be happening because: - Without Schedule 1, the IRS might be treating your "other income" as subject to self-employment tax - They may not be applying deductions you're entitled to - Late filing penalties and interest are probably included The good news is that once you provide the missing Schedule 1, the IRS will recalculate everything properly. I actually ended up owing less than my original CPA estimate once everything was sorted out. Don't stress too much - this is more common than you think!

I just want to add some reassurance here - I've been through multiple IRS notices over the years, and the 12c letter is actually one of the easier ones to resolve. It's basically just a paperwork issue, not an accusation of wrongdoing. The fact that your CPA estimated $1,200 for 3 years but the IRS is billing $2,000 for one year suggests there might be more going on than just the missing Schedule 1. When you contact your CPA (which you should do TODAY), ask them to walk you through exactly what income sources they reported and how they calculated the tax liability. Also, don't let this experience discourage you from getting compliant with your taxes. Even if your CPA made some errors, you're still way better off having filed those returns than continuing to ignore them. The IRS is generally reasonable to work with when you're making a good faith effort to comply. One last tip: if your CPA is unresponsive or unhelpful about fixing their mistake, consider getting a second opinion from another tax professional. You shouldn't have to pay twice for the same work to be done correctly.

I went through this exact same situation about 6 months ago! Got a 12c letter asking for Schedule 1 to support some "other income" I had reported. Turns out my tax preparer had included the income amount on line 8 but completely forgot to attach the actual Schedule 1 form that explains what type of income it was. The good news is this is totally fixable and not as scary as it seems. Here's what worked for me: 1. I called my tax preparer immediately (don't wait!) and they admitted the mistake 2. They prepared the missing Schedule 1 at no charge since it was their error 3. I mailed it to the IRS with a copy of the 12c letter within 2 weeks 4. About 6 weeks later, I got a letter saying the matter was resolved The key thing is responding quickly - you typically have 30 days from the letter date. Don't let your CPA brush this off or charge you extra fees to fix their own mistake. As for the higher-than-expected bill, that's probably because the IRS can't properly calculate your tax without knowing what type of "other income" it is. Some types are taxed differently than others, and without the schedule, they might be defaulting to the highest tax treatment. Once you provide the missing form, they should recalculate everything correctly. You've got this! It's just a paperwork hiccup, not a major tax problem.