First: is it really from the IRS?
Scammers love to pose as the IRS. Check these points before you do anything:
- The IRS usually writes first, by U.S. mail. It does not start an audit by phone, it does not contact you first through social media messages, and it only sends emails or texts if you opted in.
- Red flags: the contact is unexpected, it rushes or threatens you, it asks for personal or financial information, or it demands payment right now.
- Real letters have a notice number, such as CP2000 or LTR 525, in the top or bottom right corner. You can search that number on IRS.gov.
- Payments go to the “United States Treasury”, and you can pay online at IRS.gov. Never pay with gift cards, wire transfers or crypto because someone asked you to.
- Still not sure? Call the IRS at 800-829-1040 (not the number on a suspicious letter) or check your IRS Online Account.
What to do with any IRS letter
- Read it all. It says why they wrote, what they changed or want, and by when.
- Compare it with your return and your records: 1099s, invoices, bank deposits.
- Reply by the date on the letter, if it asks you to. If you agree, do what it asks; if you disagree, follow its instructions to dispute it.
- Keep a copy of the letter and everything you send.
- If you owe money, pay what you can by the due date, even if you cannot pay it all. It reduces interest and penalties.
The CP2000: your return does not match a 1099
Companies that pay you send copies of your 1099-NEC and 1099-K to the IRS. The IRS matches them with your return. If it finds income you did not report, it sends a CP2000 with the changes it proposes and the tax, interest and sometimes penalty they would add.
It often happens to freelancers and gig workers because:
- A 1099 arrived late or went to an old address, so it never made it onto the return.
- A 1099-K shows the gross amount, including platform fees and refunds, while the return reported a smaller net figure. See our Form 1099-K guide.
- Income was reported, but on a different line or combined with other income, so the totals do not match form by form.
How to respond:
- If you agree, sign the response form, check that you agree, and pay or set up a payment plan. You generally do not need to file an amended return for these changes.
- If you disagree in whole or in part, say so on the response form and explain why, with documents: the Schedule C line where you did report it, the fees included in a 1099-K, or proof that a 1099 is wrong. If the IRS proposes tax on business income without the expenses you had to earn it, explain and document those expenses too.
- Send it by uploading the documents online, by fax or by mail, as the notice explains. If you need more time, you can ask for it.
If you do not reply, the IRS will generally send another notice and then a bill for the proposed amount.
To avoid a CP2000 in the first place, report all your self-employment income, with or without a 1099, and make sure your totals cover every 1099 you received.
The CP14: you have a balance due
A CP14 means your account shows tax you have not paid, for example because you filed without paying everything. Check that the amount matches your records, then:
- Pay it by the date on the notice, online through IRS Direct Pay or your IRS Online Account, or
- Ask for a payment plan if you cannot pay it all. Our guide to the IRS payment plan explains the options and what they cost.
If you do nothing, the late-payment penalty and interest keep growing, and more notices follow.
Audits: how they really work
An audit (examination) is a review of your return to check that income and deductions are right. What to know:
- You are notified by mail. The IRS does not start an audit by phone.
- By mail or in person. In a mail audit, the IRS asks for documents about specific items, like your car expenses or a deduction on Schedule C. An in-person audit takes place at an IRS office, your place of business or your representative’s office.
- How far back: generally returns filed in the last three years, and most audits are of returns filed in the last two. If the IRS finds a substantial error, it can add more years, but usually no more than the last six.
- You have rights, listed in the Taxpayer Bill of Rights: to be informed, to challenge the IRS’s position and be heard, to appeal in an independent forum, and to be represented by someone of your choice.
- If you disagree with the result, you can ask for a meeting with a manager, use mediation, or appeal to the IRS Independent Office of Appeals.
For self-employed people, audits usually come down to one question: can you prove your income and deductions? Mileage is a classic example: without a log, the deduction is hard to defend. See mileage vs actual expenses.
How long to keep your records
| Situation | Keep records for |
|---|---|
| Most cases | 3 years from when you filed |
| You left out income worth more than 25% of the gross income shown on your return | 6 years |
| Claim for a bad debt or worthless securities | 7 years |
| You did not file a return, or filed a fraudulent one | Indefinitely |
| Records for property, like a car or equipment you depreciate | Until the period ends for the year you sell or dispose of it |
For a freelancer, “records” means your 1099s, invoices, bank and platform statements, receipts, and your mileage log. Scans or photos are fine if they are legible.
If you spot a mistake yourself
You do not have to wait for a letter. If you find income you left off or a deduction you missed, you can fix it with Form 1040-X, the amended return. Doing it before the IRS writes to you usually means less interest.
To check the numbers on a return or a notice, our 1099 tax calculator estimates your federal tax as a self-employed person.