Got this letter from the IRS about income discrepancy - Is this considered an Audit?

This sounds like a CP2000 notice, which is an automated underreporter notice, not technically an audit. The IRS computer system automatically compares information reported on your tax return with information reported by third parties (employers, banks, etc). When there's a discrepancy, these notices get generated. The key difference between this and an audit is that an audit typically involves a human examiner looking at multiple aspects of your return, while this is just focused on specific income reporting differences that were flagged by their automated system.

After getting a similar notice last year, I spent HOURS trying to figure out what was going on and gathering all my documents. Then I found this service called taxr.ai (https://taxr.ai) which saved me so much time. You upload your tax docs and the notice, and it analyzes everything to show exactly where the discrepancy is happening. It highlighted a 1099 I completely forgot about from a small freelance job that explained why the IRS was saying I underreported.

Just wanted to update after trying taxr.ai - it was actually super helpful! Uploaded my documents and the CP2000 notice, and within minutes it showed me that the IRS was including some stock sales from 2023 but wasn't accounting for my cost basis correctly. The platform even helped me draft a response letter explaining the situation and what documentation to include. Definitely easier than the last time I dealt with this!

If you're planning to call the IRS to discuss this notice, save yourself hours of frustration. I used Claimyr (https://claimyr.com) and it was a game changer. They basically hold your place in the IRS phone queue and call you when an agent is about to answer. I was able to discuss my CP2000 notice directly with someone at the IRS without wasting half my day on hold. Check out how it works here: https://youtu.be/_kiP6q8DX5c

Okay I'm back and I need to eat my words. After posting my skeptical comment I decided to try Claimyr just to prove it wouldn't work. Well, I was wrong. I set it up yesterday afternoon, went about my business, and got a call about 2.5 hours later connecting me with an actual IRS agent. The agent was able to explain my notice and give me options for resolving it. I didn't have to sit there listening to that awful hold music for hours. Definitely using this for any future IRS calls.

Just a heads up - regardless of whether you agree or disagree with the notice, DON'T ignore it. I made that mistake once and ended up with penalties and interest on top of what I originally owed. The IRS will assume their calculation is correct if you don't respond by the deadline on the letter.

If this is your first time getting a CP2000, make sure you check if they calculated the taxes correctly. Last year they sent me one claiming I owed $4k, but when I looked closely I realized they had double-counted one of my 1099s. Sent in my explanation with documentation and they completely canceled the proposed amount. These notices aren't always accurate!

I went through something very similar last year and want to share what I learned. First, don't panic - these CP2000 notices are super common and usually straightforward to resolve. The key is to carefully review every line on the notice against your actual tax documents. In my case, the IRS had records of a small 1099-MISC that I had completely forgotten about from some freelance work I did. Once I found that document, everything made sense and I just had to pay the additional tax owed plus a small amount of interest. My advice: gather all your tax documents (W-2s, 1099s, bank statements, etc.) and go through them systematically. Look for anything that might match the income amounts the IRS is claiming you didn't report. Sometimes it's something really simple like a forgotten savings account interest statement or a small side job payment. If you find the missing income and the IRS calculation looks correct, it's usually easiest to just pay it. But if you genuinely can't find what they're referring to or you think they made an error, definitely respond with your documentation before the deadline. Don't let it slide - that's when penalties and interest really start to pile up.